David Whitehead survives liquidation

16 May, 2013 - 22:05 0 Views

The Herald

Provisional judicial manager Mr Winsley Militala had recommended the company be placed in liquidation because he had failed to raise working capital to revive operations and secure strategic investors.

The collapsed textile firm 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.

According to the High Court minutes, 56 percent of the creditors owed about US$6,5 million voted for final judicial management while 46 percent with total claims of US$5,5 million voted for liquidation.

Shareholders with 590 million shares or 75 percent of the issued share capital voted for final judicial management. Both shareholders and creditors have nominated Mr Knowledge Hofisi of Aurufin Capital as final judicial manager.

Mr Hofisi has since come up with a proposed rescue plan, premised on conversion of debt into equity, disposal of non-core assets to raise working capital and a restart of factories, as well as bringing in a strategic partner.

The DW debt currently stands at US$13,8 million.
The former Zimbabwe Stock Exchange-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 chief executive 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 the provisional judicial manager.
Mr Militala said various capital-raising initiatives were pursued to rescue the company, in recognition of its national significance, but none could materialise. In his findings, he said the company’s problems worsened at the peak of hyperinflation in 2008, when the former blue-chip firm was seeking to raise capital.

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