Merlin seeks to dispose of obsolete, non-core assets

Published: 15 May 2018

TEXTILE giant, Merlin, has filed a High Court application seeking to dispose obsolete and non-core assets to raise additional working capital.

The Bulawayo-based company, which presently is under judicial management, opened early this year following the implementation of a business rescue strategy that saw one of its creditors injecting a minimum $2,1 million working capital.

The firm went defunct after it was placed under judicial management in 2012.

In a written response to Business Chronicle, Merlin judicial manager Mr Cecil Madondo said: "We advise that we filed an application for disposal of non-core and obsolete assets in terms of Section 307 (1) of the Companies Act (Chapter 24:03), which dictates that, 'A provisional judicial manager or final judicial manager shall not, without the leave of the court, sell or otherwise dispose of any of the company's assets except in the ordinary course of the company's business'.

"The application was filed on the 19th of March 2018 under Case No. HC 899/18 and we will proceed to dispose of the assets once the order has been granted to raise additional working capital for repairs and maintenance work which is ongoing."

In January, Merlin indicated a desire to dispose of assets such as vehicles (Toyota Dyna Truck, Nissan Sunny, Hyundai Excel and Mazda F1300) and industrial machines that include washing machine, drying machines, weaving machines, winch machines and electric motors.

In his progress update report recently presented at the creditors' meeting held in Bulawayo, Mr Madondo said repairs and maintenance work at Merlin were ongoing in the other departments and had targeted to complete the dyeing division, which already has orders waiting for dyeing and bleaching.

In March, the textile company announced that it had secured a contract to dye 306 tonnes of yarn from a local company. The company requires at least $30 million in the next five to 10 years to revamp the whole production process. Going forward, Merlin has focused not only on producing napkins but a range of high quality and high demand products such as diapers and women sanitary wear, face towels, morning gowns, bed sheets, baby carriers, bath mats, wrappers and kitchen towels.

A proposal has also been put forward that the company sets up its own ginning plant that will create a complete production cycle and additional 1 000 jobs across the value chain.
- chronicle

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