DAVID Whitehead Textiles Ltd (DWTL) says it will be out of the current crisis by June next year. Cecil Madondo the company’s judicial manager told <
I>businessdigest this week that the company, which has been under judicial management for the past one and half years, will be able to pay all its creditors and relist on the Zimbabwe Stock Exchange (ZSE) in the first half of next year.
“We are happy with the progress being made following the coming on board of the new investor,” said Madondo. “We anticipate to pay all our creditors and to relist next year.” The company recently announced that is had found a new investor to fund the recapitalisation exercise.
Elget Investments (Pvt) Ltd, a company owned by Zimbabweans in the diaspora, agreed to invest US$5,4 million in exchange for shares in the troubled textile company. The actual price of David Whitehead is US$10 million.
“We noted an adverse variance on the highest purchase price offered of US$5,4 million against the preferred purchase price of US$10 million but nevertheless, we believe that the recapitalisation process should proceed on condition that the investor undertakes to further recapitalise the company within the next 12 months of signing the share subscription agreement,” Madondo said.
The other bidders out of the 25 which were shortlisted include Industrial Development (IDC), Parrogate Holdings, Zoe Electrical Systems and Zoom Developers.
David Whitehead’s operations and cash flows problems started in 2004 due to the slump in world textile prices and the influx of cheap imports from China. The situation deteriorated last year when production at the company ground to a halt after a prolonged job action. There was also interference from politicians in Mashonaland who are understood to have tried to muscle into the company to get a substantial shareholding.
Madondo whose tenure as judicial manager ends next month said the company can only survive if a competent board of directors is appointed to direct operations.
“We remain optimistic that the impending cancellation of the judicial management order will result in the appointment of a balanced board of directors of high integrity and completely independent non-executive directors to take over from the final judicial manager,” he said.
According to documents seen by businessdigest, the company’s cash flow position has been improving resulting in the payment of 61% of the claims lodged by creditors as at October 29.
David Whitehead was delisted from the local bourse in April 2005 after failing to publish audited
financial statements within the stipulated period of three months after year end. The company also failed to regularise its shareholding structure according to ZSE requirements.
Madondo said significant progress had been made towards re-listing David Whitehead.
“The new investors have to ensure that the company remains listed. The proposed shareholding is also in conformity with the ZSE requirements,” said Madondo.
He said the company had updated all its financial results during the year it was suspended and presented them to the ZSE.