THE government this week intensified its bid to takeover a 30% stake in troubled textile company, David Whitehead (Pvt) Ltd, through the Industrial devel
opment Corporation (IDC).
Three meetings were held over the past two weeks as government intensifies its bid to muscle into the textile company which has been under judicial management since mid 2006.
In all those meetings, government has made it clear that it will get the stake whether the shareholders like it or not.
Industry and Trade minister Obert Mpofu and Minister of policy Implementation and State Enterprises, Webster Shamu, are understood to be pushing for the IDC takeover.
The renewed pressure comes barely four weeks after David Whitehead judicial manager, Cecil Madondo of Tudor House Consultants, announced that a new investor, Underhill, had won the bid to takeover the majority stake in the company. Underhill is a company owned by Zimbabweans in the diaspora.
IDC lost the bid conducted by an independent investment committee which was set up to identify a new investor to recapitalise the company. After its initial bid was rejected, IDC tried to push for another chance together with an Indian company called Parrogate.
This second bid also failed because the investment committee said there was no clear commitment that the potential investors would get the foreign currency needed to resuscitate David Whitehead.
Businessdigest understands that IDC managing director, Micheal Ndudzo, held a meeting with
Mpofu two weeks ago to discuss the issue. In that meeting, Mpofu told Ndudzo that government was still interested in getting a stake in David Whitehead and IDC should push the issue.
Ndudzo then held the first meeting with other David Whitehead shareholders on November 20 where he presented government’s proposal.
The issue was discussed further at a meeting held on November 22 at the IDC offices.
Former David Whitehead chief executive Edwin Chimanye, whose shareholding through his company called Guscole has been whittled down from 88% to 36% after the recapitalisation programme, was present at the second meeting. Underhill’s local representative, Regis Saruchera also attended the meeting. There were also three representatives from IDC. In that meeting Ndudzo said he had been directed by Mpofu to ensure that IDC gets a 30% stake in David Whitehead.
Ndudzo said government was worried that the majority stake in IDC had gone to Underhill, a company which he insisted was controlled from outside. He said in order to ‘solve’ the issue the shareholders should find a way to accommodate IDC with a 30% stake. He said the 30% stake for IDC should come from Guscole.
This would mean that Gusco would be left with 6% after the transaction. Guscole shareholders however protested that they had already made a compromise to reduce their stake from 88% to 36% in order to recapitalise the company.
“His tone was clear that government would get the stake anyway even if we refused,” said an official who attended the meeting. Ndudzo also said government was worried that shareholding structure did not include a technical partner who is in the textile industry. To address this concern, Ndudzo said IDC had made plans to come in with Parrogate.