National blankets clears $2m debt

Published: 17 December 2013

NATIONAL Blankets Limited has cleared about $2 million it owed to Capital Bank, the textile company's judicial manager, Phillip Ndlovu, has said.

In a report presented during a creditors and members meeting in Bulawayo on Friday, he said the firm recently raised $2,6 million from the sale of Industrial Plot number 39 to the National Social Security Authority (NSSA).

"A payment of $2 600 000 as settlement of sale to NSSA of the Industrial plot No 39,that was bonded to Capital Bank was made to the company.

"The proceeds of the sale amounting to $1 944 035 have since been transferred to Capital Bank as a means of liquidating the debt owing to the bank.

"The remaining balance from the proceeds net of statutory costs, taxes and City of Bulawayo rates will then be made available for distribution to the creditors," he said.

He said the scheme of arrangement speculated $425 865 to be available for distribution after for statutory costs and taxes of $230 100, upon industrial Plot Number 39 Portion of Bulawayo Municipal Cattle Sales Yards.

"However, the City of Bulawayo directed that its rates had to fully settle for a clearance certificate to be issued. An amount of $101 562, previously not included in the scheme was therefore paid, bringing the balance due for payout to $323 903."

Ndlovu said the Registrar of Companies was still being engaged to issue shares at a low cost to facilitate increasing of authorised share capital to be able to issue ordinary shares.

"The lowest negotiated price is currently at $45,000. Mechanisms are still being sort to reduce the weight of the exposure to shareholders and the company," he said.

"I therefore made a resolution, within my right as a judicial manager to distribute $323 903 immediately to creditors pro rata and issue share options which are exercisable at zero cost as soon as National Blankets Limited has funds to increase the authorised share capital."

As per the scheme, he said any resultant balances on the creditors' claims are converted to ordinary shares in the applicant at $0,50.

"All creditors will become shareholders on the revamped scheme if the issue of shares is exercised, it will give creditors power and representation on the board.

"The company's current shareholding structure is distributed at 50 percent share capital and 50 percent share premium, hence if the company does issue these shares it will have its creditors including workers owning shares in the entity," said Ndlovu.

As part of the company's recapitalisation, he said National Blankets has received a $500,000 loan facility from the Central African Building Society.

"This fund is directed to facilitate operational existence of the company and to purchase raw materials. The company has managed to use a huge fraction in the purchase of raw materials for the last quarter of the year and part of 2014," he said.

National Blankets was placed under judicial management in 2012 following viability constraints.

Due to liquidity challenges on the market, antiquated machinery, intermittent power supplies, and stiff competition from cheap imported products, local companies were still struggling to increase capacity utilisation to competitive levels.

The Confederation of Zimbabwe Industries manufacturing survey report released in September indicate that capacity utilisation in local companies has dropped from 44,2 percent last year to 39,6 percent this year.
- chronicle