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(HERALD) Diasporans snap up 51pc stake in David Whitehead

Diasporans snap up 51pc stake in David Whitehead

Elget Investments, trading as Underhill, a company owned by a consortium of non-resident Zimbabweans, has won the keenly contested 51 percent stake in David Whitehead Textiles Limited. Six bidders including the Industrial Develop-ment Corporation, the Cotton Company of Zimbabwe, Parrogate, Cabview and Zoom Developers were vying for the equity in the giant textile manufacturer.

The transaction, worth US$5,4 million, is however subject to approval by the Zimbabwe Stock Exchange and DWTL shareholders at the company’s extraordinary general meeting set for next month.

This means the current shareholding structure in which Guscole Investments is the main shareholder with 88 percent shares would be changed.

Minority shareholders own the remaining shareholding.

DWTL judicial manager Mr Cecil Madondo said in a circular to shareholders yesterday that payment of the US$5,4 million would be in the form of a bank guarantee, a performance bond or any other surety accepted by the judicial manager.

"The recapitalisation is intended to remove the challenges that culminated in DWTL being placed under judicial management in May 2006 and restore viability," said Mr Madondo.

The funds, he said, would also be used to pay pre-judicial management period creditors, acquire new machinery, spares and consumables, working capital as well as meet the costs of the transaction.

Mr Madondo said the transaction would result in the cancellation of the current judicial management and pave way for appointment of new directors and lifting of the company’s suspension from the ZSE.

The deal, which involves the waiver of rights of pre-emption by existing shareholders, would boost the capital position of the textile manufacturer while broadening the shareholder base, he said.

He added that Zimbabwe would benefit from the transaction through enhanced revenue from taxation, increased foreign currency generation and employment creation.

The transaction would, however, affect DWTL’s authorised share capital which will increase from 483 601 732 ordinary shares of $0,05 cents each to 783 million shares of the same value.

The Chegutu-based company was placed under judicial management following revelations that it was facing serious liquidity challenges, which culminated in workers downing tools in protest over late pay.

Production capacity, which had also declined to an all time low of 10 percent, has since improved under judicial management to above 65 percent. — New Ziana.

Labels: DIASPORA, INVESTMENT, THE HERALD, ZIMBABWE

posted by MrK @ 4:53 AM