BULAWAYO, March 6 (The Source) – Bulawayo-based textile firm Merlin is close to securing a $1 million funding under the Distressed Industries and Marginalised Areas Fund (Dimaf) to resume production while scouting for credible investors, the judicial manager has said.
The judicial manager, Cecil Madondo of Tudor House on Friday told The Source in an interview that the fund would go a long way in reviving Bulawayo’s iconic firm, which he described as a national project.
“The office of the judicial manager and officials managing the Dimaf are currently in talks with a view of securing a $1 million to kick start production whilst looking for credible investors. We are almost 90 percent in finalising that. Merlin is a national project and it should be prioritised,” Madondo said.
This would represent a turnaround by the Central African Building Society (Cabs) which administers the fund after denying the firm last year.
Dimaf was set up in 2011 as a revolving facility to provide financial assistance to struggling companies outside Harare, especially those in Bulawayo.
Merlin was once among the largest textile companies in the country with over 2,000 employees, but now has a staff complement of less than 253 workers and 27 managers. It is part of Bulawayo businessman Delma Lupepe’s group of companies.
The company survived liquidation over a decade ago and was placed under judicial management for a third time in December 2011. It suspended production in October 2010 to minimise losses when capacity utilisation fell to a lowly 20 percent.
At full capacity, the plant at Merlin had potential to process 120 tonnes of lint per month.
The company owes creditors more than $4 million.
On Tuesday Lupepe told The Source that Japanese firm, Marubeni Tekmatex Corporation, had pulled out of a deal to invest $30 million in the struggling firm, citing infighting between shareholders and the judicial manager.
“The investor said he cannot put the money while the company is still under judicial management. We could have been operating right now but we can’t due to such issues. We successfully applied for removal of the company from judicial management in December but Cecil Madondo appealed at the High Court challenging the court ruling,” he said.
One of the firm’s major creditors, Old Mutual in December successfully applied for removal of the Merlin from judicial management citing lack of progress in the resuscitation of the company and failure by the judicial manager, Madondo, to turnaround the company.
However, Madondo appealed decision and the case and is still pending.
He declined to comment on the alleged infighting with shareholders.