Stalemate at DW

But creditors and shareholders were not happy with the postponement and wanted the meeting to proceed. They argued that since Mr Militala was appointed two years ago to run the company, he is yet to come up with a “meaningful” report on the state of affairs of the former textile giant.

Shareholders seem to have been also riled that while the company had not been operating for the past two years, Mr Militala had billed the company US$450 000 in fees.
Already, he has paid himself US$80 000. Shareholders and creditors interviewed said “this must be the most expensive judicial management in the country”.
“Essentially, it is two years now after he was appointed but we have not yet finished the first meeting,” said one major shareholder.

“It is the first meeting that is being continued. Why is he always giving us excuses now and again? And making matters worse is that Militala is now demanding US$450 000. How can someone charge that kind of money for a company that is not operating? His financial records are showing us that he generated about US$415 000. We believe he has failed.

He had title deeds . . . so why did he not cede those title deeds, get loans from the banks and run the factories?”
On the alleged asset stripping by former directors, a creditor said “those things have no effect on way forward”.

In an interview, Mr Militala said the draft report was ready but could not be circulated because of an outstanding issue regarding alleged asset stripping by former directors.
“I am hoping to get a final report from the police before the end of this week,” he said.
DW is insolvent, with liabilities of about US$14 million against assets of US$6 million. This makes it a good candidate for liquidation. Elgate Investments, a 52 percent shareholder in the company, once applied for the company’s liquidation.

Mr Militala said investors who expressed interests in the company “were willing to take their interests to another level, contingent upon the company being placed under liquidation”.
But some shareholders believe the company can be turned around and liquidation “should never be an option”.

“We believe the company can be turned around,” said one shareholder.
“He (Mr Militala) should just go and we (shareholders) and creditors appoint a final judicial manager who can turn around the company.”

David Whitehead was, for the second time, placed under judicial management in December 2010, having gone through the same reconstruction between 2005 and 2008 under Dr Cecil Madondo of Tudor House Consultancy.

Elgate Investment, which acquired a 52 percent stake in the firm, applied for a second judicial management after the company plunged into a serious financial crisis. The former ZSE-listed company was once one of the country’s biggest employers, sustaining thousands of livelihoods directly and indirectly.

Formerly owned by Lonrho before a management buyout in 2001, led by former CEO Mr Edwin Chimanye, it has three main plants in Chegutu, Kadoma and Gweru. DW requires US$3,5 million for plant refurbishment and US$2,6 million as initial working capital, according to Mr Militala.