HARARE, December 13 (The Source) – Textile manufacturer David Whitehead Textiles is seeking a $50 million capital injection to turnaround the company to full capacity, the judicial manager overseeing its rehabilitation has said.
David Whitehead, once a major operation employing thousands, was placed under judicial management in 2010 and has failed to attract investors. Knowledge Hofisi of Aurifin Capital was appointed as the judicial manager in 2014.
“David Whitehead shareholders don’t have money to inject to start operations and around $50 million is required to fully operate the company,” Hofisi told creditors during a meeting in Harare on Tuesday.
Hofisi added that the firm was negotiating with a financial institution for $2 million working capital to resume production.
The company’s major shareholders are Elgate Holdings, with 23.57 percent, and Edwin Chimanye with 28.18 percent.
Elgate Holdings failed to acquire 51 percent (399,258,947 shares) of the stake for $5.4 million and only paid $1.6 million to secure 23,57 percent (118,298,947 shares).
The 280 million shares which were not paid for by Elgate were forfeited and could be sold if David Whitehead fails to get working capital.
“In order to ensure that there is full resumption of operation we need working capital. The judicial manager is also contemplating to sell about 280 million shares and those are the shares that were forfeited by Elgate, because the original plan was that Elgate was supposed to inject about $5.4 million but it was then verified that they injected about $1.6 million,” said Hofisi.
David Whitehead, formerly a Lonrho business, has operations in Kadoma, Gweru and Chegutu.
Chegutu West Member of Parliament Dexter Nduna (ZANU-PF), who attended the tense creditors’ meeting at a Harare hotel, proposed that David Whitehead converts debt into equity.
“You cannot resuscitate David Whitehead using $2 million. What David Whitehead is most probably going to do is risking hostile takeover… You (creditors) need to come here and agree that the time for the judicial management is over, so that you turn the debt into equity,” said Nduna.
The company has assets amounting to $16 million and a creditor’s’ book of $13 million with 70 percent being unpaid salaries.