Agri Value Chain Zimbabwe (AVCZ) has increased stake in David Whitehead Textile Ltd (DWTL) to 66 percent after buying out some of the minority shareholders.
This comes after DWTL recently engaged technical experts from Asia and Europe to assess state of equipment at the company in preparation for re-opening of factories.
The exercise was completed two weeks ago with machines that need to be replaced or repaired identified. Some of the equipment will be send abroad for repairs.
DWTL has a weaving and wet plant (for dying) in Chegutu and a spinning plant in Kadoma.
AVCZ initially acquired 51 percent stake, which was held by Elgate Holdings in May last year for $5,4 million. Elgate had failed to fully pay for the shares more than a decade after signing a share subscription agreement with DWTL. The agreement was terminated in April last year on the basis of “non-performance” by Elgate. The High Court ordered the concession for the purchase of shares be revoked.
AVCZ is a local company whose business interests include grain milling, cotton farming and ginning as well as production of edible oils in and outside the country.
In addition to the share subscription consideration, AVCZ has extended additional funding for the settlement of all pre-judicial management creditors and post-commencement debts, the process currently underway and nearing completion.
“I can confirm that some minority shareholders have sold their shares and our stake is now around 66 percent from 51 percent,” AVCZ representative Phanuel Moyo told Business Weekly in an interview recently.
Moyo said the acquisition of David Whitehead was strategic in the cotton value chain as the company already owns textile related assets including ginneries in Chegutu and Checheche.
“We are now working towards reviving the company but at the moment we cannot give specific timelines,” said Moyo.
“We have a team of experts who came to help us in assessing state of the machines. Some of the machines are beyond repair and those will be replaced. Some of the machines which can be repaired will be sent overseas for repairs; so it is a process but we are happy it has started.”
DWTL operations manager Tendai Chetse, said full scale re-opening of factories would not be determined by the completion of refurbishment or replacement of the machines as some of them were still usable.
“We still have some machines, which are still usable at the spinning factory in Kadoma and weaving division in Chegutu; so we will definitely have some functional areas,” he said.
DWTL plays an integral part in the entire cotton value chain system 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.
It was registered on the ZSE in 1971. In 2002 Lonrho Africa disinvested from the textile industry in Zimbabwe and a DWTL management consortium, comprising senior managers, spearheaded the acquisition of 88 percent of the issued and fully subscribed ordinary share capital.
The acquisition was made through an investment vehicle called Guscole Investments. Guscole Investments comprised of Edwin Chimanye, Ernest Chivaura, Ian Cripps, George Maulidi, John James Fergusson, Oliver Gwaku and Ms Daphne Ritson.
Between 2002 and 2006 Chimanye was the chief executive officer of the company.
In 2005, DW was suspended from the ZSE after failing to produce audited financials and regularising its shareholding structure in conformity with the listing requirements.
The company was first placed under judicial management of Dr Cecil Madondo, between May 2006 and April 2008, and during that period Elgate Holdings won a competitive bidding to acquire new shares, which translated to 51 percent in DWTL for US$5,4 million.
That had an effect of diluting Guscole Investments and other minority shareholders.
However, only US$1,6 million was paid to DW by Elgate. Following the cancellation of the first judicial management in April 2008, the company was handed over to Elgate Holdings, principally owned by Andrew Toendepi who further allegedly stripped the assets of the company, dismantled a total of 300 looms and exported such as scrap material and sold a Harare property. Two years later the company was, for the second time, placed under provisional judicial management.
For the subsequent three years, there was much litigation, resulting in the then judicial manager, Winsley Militala recommending the liquidation of the company because of lack of investor interest. In March 2014 the High Court granted the final judicial management order after a business rescue plan had been prepared by Knowledge Hofisi.