Published: 08 April 2014

DAVID Whitehead Holdings has been saved from liquidation after the High Court granted a final judicial management order for the company. Knowledge Hofisi of Aurifin Capital has been confirmed the final judicial manager.

The sun almost set for the former Zimbabwe Stock Exchange listed firm after provisional judicial manager Winsley Militala recommended liquidation of the company after he had failed to raise working capital to revive operations and secure strategic investors.

Hofisi was first appointed the final judicial manager for David Whitehead in April last year after the majority of the creditors and 75 percent of shareholders with voting rights voted against liquidation. But he was not confirmed on the return day after some procedural issues were raised by Militala.

In granting the order, Justice Makoni ruled "the provisional judicial manager, Winsely Militala of Petwin Executor and Trust Company shall hand over all matters . . . to the final judicial manager." Hofisi's appointment is with effect from yesterday.

David Whitehead Textiles was, for the second time, placed under provisional judicial management in December 2010, having gone through the same reconstruction between 2005 and 2008 under Dr Cecil Madondo of Tudor House Consultancy.

Aurifin Capital's rescue plan is premised on conversion of debt into equity, disposal of non-core assets to raise working capital and restart factories, and bring in a strategic partner.

According to the plan, Aurifin intends to come up with "a scheme of compromise" to avoid liquidation.

Workers and some creditors owed about $8 million would be persuaded to convert part of their debt into equity, but on condition the company will be subsequently re-listed on the ZSE.

Capital and reserves would increase by $8 million while liabilities will decrease by the same amount, thereby strengthening the company's balance sheet.

Workers will be guaranteed job security while other creditors, such as suppliers of goods and services, would continue doing business with the company.

Aurifin also intends to sell some of the company's non-core assets to raise working capital. Debt-equity could be mobilised but this may be difficult, owing to the current liquidity challenges.

At the moment, David Whitehead will score low marks on credit rating because of its well-documented challenges. It is envisaged that production would start at the spinning division in Kadoma.

It is then expected that proceeds generated from the spinning division in Kadoma would be used for the refurbishment of machinery at the weaving, dyeing, and hosiery divisions in Chegutu over an estimated period of six months.

Formerly owned by Lonrho plc, before a management buyout in 2001, led by former chief executive Edwin Chimanye, DWTL has three plants in Chegutu, Kadoma and  Gweru.

Elgate Investments is the majority shareholder with 51 percent, but the ownership is being disputed. Chimanye is the second largest shareholder with 12,14 percent.
- The Herald

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