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Business Reporting
Norton-based manufacturing company Non-Ferrous Die Casting (Pvt) Limited, which is under judicial management, might be liquidated despite the injection of working capital by investors early this year.

The company engaged investors MSC Investments in January who was interested in acquiring a 51 percent stake in the company.

This followed the signing of a memorandum of understanding between MSC Investments and Rungano Enterprises detailing the conditions precedent for MSC Investments to acquire the 51 percent of the 93 percent stake held by Rungano Enterprises in NFDC.

The Judicial Manager Mr Christopher Maswi of Fairvalue management consultancy said to date MSC Investments has not managed to meet the financial conditions and no payment has been made to Rungano Enterprises but the investor injected working capital and requested for management rights.

Therefore there was no transfer of shares and Rungano Enterprises still has 51 percent stake in NFDC and MSC Investments is not yet a shareholder in NFDC.

The investor managed to supply the raw materials valued at $75 000 as per the undertaking. The investors also provided $25 000 in Capex.

The investors had undertaken to raise $100 000 for the repayment of creditors by December 31, 2014. However, only $8 000 had been reserved as at October 31, 2014. Forecasts done in the second meeting of creditors indicated that $72 500 ought to have been reserved for Creditors by the October 31, 2014.

“From the look of things characterised by the company’s performance based on legal obligations I am quite sure the company is heading for liquidation,” said Mr Maswi.

Mr Maswi said the funds attract an interest cost of 15 percent per annum. Capex funding will have a one year grace period and will be payable over 15 months.

“After exhausting the raw material supplies from for the capital injection, NFDC bought raw materials from the investor on 45 days credit facility. The credit limit was $50 000 per month.

“From the operations of the business, at least $100 000 was to be reserved for the payment of creditors by December 31, 2014,” said Mr Maswi.

He said the company has proven that it is unable to repay its debts by the increase in creditors by 27,9 percent from $1 950 249 million to $2 494 737 million.

The company failed to set aside $100 000 as envisaged at the second creditors’ meeting.

NFDC increased its negative net worth by 37,6 percent from $1 068 414 million to $1 469 953 million which proved that the company’s technical insolvency has increased, which also warrants the winding up of the company.

He therefore proposed to defer liquidation by four months and if the proposed scheme fails, the company will go for liquidation. NFDC is a medium sized foundry manufacturing company based in Norton and the main business of the company, which is incorporated in Zimbabwe, is the manufacturing and marketing of plumbing, borehole fittings, irrigation sprinklers and spares. The company was established in 1972 and was run as a family business until it was acquired by three indigenous professionals in a leveraged buyout transaction in October 1993.