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Harare Bureau
ZIMGLASS judicial manager Winsley Militala has recommended liquidation of the company instead of a $3 million offer by an investor to buy the firm’s book assets.
According to a report to be presented by Militala at the next creditor’s meeting this week, the investor, Sahara Holdings had made a conditional offer to purchase the book assets of Zimglass, as opposed to the entire business including assets and liabilities.
Initially, Sahara, through its Mauritius registered investment vehicle, Ekhaya had mandated Trustlink International of Mauritius to raise $10 million to acquire the company.
The offer was on condition that Zimglass would provide a detailed due diligence report to ensure the assets are free from any additional encumbrances and material defects.
Sahara also wanted an undertaking from the government that proper protection will be provided, as well as dealing with all the legacy issues at the company.
Lastly, Sahara demanded a satisfactory report on the technical viability by the investor’s technical partner.
Despite the offer, Militala said it was in the best interest of the stakeholders to wind up operations.
“Zimglass is a specialised plant that can only be sold to entities with glass-making intentions,” said Militala.
“The extent of indebtedness is so large and as such scares potential investors, as well as raise doubts as to future viability. It’s therefore my considered opinion that the company be liquidated and efforts made for the sale of the assets to the best advantage of the stakeholders.”
Zimglass’ liabilities stood at $30,2 million as at June 2015, against assets at $2,2 million, thus making it insolvent.
It was placed under provisional judicial management in August last year and remains closed.
In the first reports, Militala recommended that the company be placed under final judicial management on the basis that option had not been sufficiently explored to revive the firm.
Militala said he needed more time to pursue equity investments and restructure the loans to banks through negotiations. He further recommended the company to continue under final judicial management on the strength of successes he had achieved in loans restructuring.
The land for debt swap with FBC was proving successful and so was the issue of ascertaining the actual liability with regards to IDC South Africa loan.
Some investors were also making enquiries with the view of injecting capital into the troubled company.
Zimglass has an installed monthly capacity of about 240 tonnes of glass material for making bottles of beer, soft drinks, food, pharmaceuticals as well as kitchenware.
The country’s sole flint glass manufacturer is owned by Industrial Development Corporation.
According to local media reports, Zimglass was shut down in September 2010 to allow refurbishment after it had secured $7 million from the IDC but since then has been struggling to get back on its feet.
The company has about 500 employees who are owed salaries dating back to 2010.
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