Good times beckon for D. Whitehead
THE search for an investor for David Whitehead ( DWTL), previously the country’s largest garment maker, began around 2004 when the company was first placed under provisional judicial management after plunging into financial problems.
It was not an easy road as it took almost one and a half decades to secure an investor with the requisite financial muscle to take the company out of the woods.
In May last year, Agri Value Chain
Zimbabwe ( AVCZ) bought 51 percent shareholding in DWTL for $5,4 million.
This brought a sigh of relief to workers after nearly 15 years of agonising over their fate as the future of David Whitehead was uncertain.
In addition to the share subscription agreement, the investor has also extended additional funding to settle obligations with pre- and post-judicial management creditors.
AVCZ has since spelled out its plans to revive the company.
These plans include a quick injection of capital as well as modernising the plants. The reopening of the factories is imminent.
“AVCZ and the judicial manager of DWTL are now working closely to revive production, starting with the Chegutu and Kadoma factories,” judicial manager Mr Knowledge Hofisi said last week.
“The company commenced settling its pre- and post-commencement creditors in 2019. The process is nearing completion.
“In view of these developments, the judicial manager has started taking steps to remove the company from judicial management by 31 March 2020,” Mr Hofisi revealed.
Mr Norman Makono, secretarygeneral for Zimbabwe Textile Union, told The Sunday Mail Business that it was refreshing that the company’s resuscitation is progressing so well.
He, however, emphasised on the need to consider re-engaging former workers.
“We believed in the resuscitation of the company. We applied for judicial management to avoid
liquidation,” said Mr Makono in an interview with this publication.
However, some shareholders are not in support of the transaction, arguing that the $5,4 million subscription price was “ridiculous”. They are pushing for a review of the deal.
Mr Edwin Chimanye, who owns about 13 percent stake of the company, has since filed a High Court application challenging the transaction.
David Whitehead plays an integral part in the entire cotton value chain in Zimbabwe.
It was incorporated in 1951, with the name David Whitehead & Sons (Rhodesia) Limited. However, it changed its name to David Whitehead Textiles Limited in 1979.
The company was registered on the Zimbabwe Stock Exchange in 1971.
Following Lonrho Africa’s disinvestment from the textile industry in 2002, DWTL’s management consortium comprising senior managers spearheaded the acquisition of 88 percent of the issued and fully subscribed ordinary share capital in the company.
The acquisition was made through an investment vehicle called Guscole Investments, which had Messrs Edwin Chimanye,
Ernest Chivaura, Ian Cripps, George Maulidi, John James Fergusson, Oliver Gwaku and Ms Daphne Ritson on board.
Between 2002 and 2006, Mr Chimanye was the chief executive officer of the company.
However, in 2005, the company was suspended from the ZSE after failing to publish audited financials and regularising its shareholding structure in conformity with the listing requirements.
The company was first placed under the judicial management of Dr Cecil Madondo between May 2006 and April 2008. During that period, Elgate Holdings won a competitive bid to acquire new shares, which translated to 51 percent in DWTL, for US$ 5,4 million.
That had an effect of diluting Guscole Investments’ shares.
However, Elgate only paid US$ 1,6 million to DWTL.
Following the cancellation of the first judicial management in April 2008, the company was handed over to Elgate Holdings, principally owned by Mr Andrew Toendepi.
He is alleged to have stripped the company’s assets, dismantled a total of 300 looms and exported them as scrap metal. Mr Toendepi is also alleged to have sold the company’s Harare property.
Two years later, the company was placed under provisional judicial management for the second time.
For the following three years, there were several litigation cases, resulting in the then judicial manager, Mr Winsley Militala, recommending the company’s liquidation due to lack of investor interest.
But in March 2014, the High Court granted the final judicial management order after a business rescue plan was prepared by Mr Hofisi.
And in April last year, an order for the forfeiture of the shares previously issued to Elgate Holdings was granted by the High Court.
ln May last year, the forfeited shares were then sold in terms of the Articles of Association of the company.
Before AVCZ came on board as an investor, the company was sliding into insolvency.
ZAMCO and Parrogate were owed $2 million and $3 million respectively. These debts were secured against DWTL’s Chegutu and Kadoma factories — the company’s main assets.
The two were contemplating foreclosure proceedings when AVCZ came to DWTL’s rescue.