TEXTILE giant David Whitehead (DWTL) is seeking over $30 million to set up a new factory and procure critical spares, working capital as well as settle prejudicial obligations, Standardbusiness has established.
BY FIDELITY MHLANGA
Once Zimbabwe’s largest textile manufacturer, DWTL has fallen on hard times and was placed under provisional judicial management in December 2010 before confirmation of the final order in March 2015.
It was delisted from the Zimbabwe Stock Exchange in 2009 following the acquisition of a controlling stake by Elgate Holdings, whose takeover has since been reversed after it failed to pay for the stake.
Founded in 1950, DWTL used to produce 20 million metres of fabric per year while directly employing 3 000 workers.
DWTL’s judicial manager Knowledge Hofisi, in a report presented to a creditors’ meeting last Thursday, said the company needed $20 million for the new factory; $2 million for spares; $1,5 million for working capital; $1 million for shares acquisition; and $6 million for prejudicial obligations settlement.
“The process of identifying a new investor is currently underway, whilst one has been identified through a private treaty,” he said.
“The option of competitive bidding remains open. If the competitive bidding route is pursued, an invitation for the expression of interest will be flighted in the print media towards the end of 2018.”
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Negotiations to secure additional funding for working capital and more critical spares are expected to be concluded before the end of the year.
Hofisi said the investor was expected to acquire both existing and new shares.
He said valuation of the company was necessary to facilitate smooth conclusion of the sale of shares.
“The identification of the investor either through private treaty or competitive bidding process is expected to be done by year end,” Hofisi said.
“The receipt and application of additional funding is expected to be completed by March 2019 and the first phase of the acquisition of the new plant will be completed by June 2019.”
DWTL said negotiations were being made to secure foreign currency for the procurement of spares and new plant for the fabric and spinning divisions which were likely to come from Germany and China.
The acquisition of new machinery is envisaged to result in the increase of production capacity by 150% from 6 million metres to 15 million metres of fabric per annum and revenue of about $45 million.
“The new machinery will enhance competitiveness through improved quality consistencies, higher efficiencies and economies of scale, thereby ensuring that the company will be able to consolidate its position on the local market as well as overseas markets,” Hofisi said.
“One weaving machine will replace four current weaving machines. It is anticipated that the space requirement will decrease whilst electricity and wages will follow the same pattern.”
Tendai Chetse, the DWTL chief production officer, said the company was saddled with antiquated machinery.
“Most of these machines were bought as second-hand in early 1980s,” he said.
“These machines were manufactured in 1973. If we look at modern machinery, we can say we are way behind. the machines break down frequently amid low working capital to procure new spares.”
Chetse added power cuts constrained the company’s production capacity.
“We also have lots of power cuts and they have been long and frequent,” he said.
“If you have power cuts in the midst of processing, it affects quality especially on fabric. Because of power cuts, we have had problems with restarting our machines when power is restored.”
The company resumed operations in January after securing a $2 million facility from the Zimbabwe Asset Management Corporation (Zamco) and has woven 500 000 metres of fabric with about 170 workers.
The first disbursement was deployed towards the purchase of cotton yarn and it constituted about 40% of the facility.
Funds were disbursed by Zamco to DWTL-approved suppliers.
About 10% of the facility was utilised to import critical spares in order to increase the number of weaving machines in operation.
The first batch of spares was received in August 2018, with more being expected before year end and it is anticipated that weaving production will increase significantly.
The remaining balance of the funds was used to finance other operational costs such as payment of wages, salaries, electricity, dyes and chemicals.
