TINASHE MAKICHI
A local investor, Valleco, has acquired two companies owned by the Industrial Development Corporation of Zimbabwe (IDCZ) for an undisclosed amount, Business Times can report.
The two textile companies—Travan Blankets and Irazim Textiles—were operating under Modzone Enterprises, a joint venture between the government of Zimbabwe and Iran through IDCZ and Iran Pension Fund, respectively.
The companies ceased operations in 2012 owing to financial constraints. They were placed under receivership in 2013 and Reggie Saruchera of Grant Thornton was the judicial manager.
However, the companies have been operating at below 10% capacity utilisation.
The companies require about US$16m to recapitalise operations.
Saruchera confirmed the acquisition of the two companies by Valleco, which snapped up 100% shareholding in the entities.
According to Saruchera, Valleco has begun recapitalising the two companies, paving the way for their exit from judicial management.
“We are pleased to advise that following the restructuring and reorganisation of Irazim Textiles Limited and Travan Blankets under judicial management, the companies have secured an investor.
“The investor has since initiated the recapitalisation of the textile and blanket manufacturing operations of the companies,” Saruchera said.
He added: “Pursuant to the sanctioning of the scheme of arrangement comprising the investor, creditors and shareholders of Irazim Textiles and Travan Blankets, by the High Court of Zimbabwe and as soon as the handover-takeover procedures are complete, an application will be made to remove the companies from judicial management. Once the order has been granted, the investor and their management will immediately assume control over the affairs of the companies.”
Prior to their shut down in 2012, the two companies-Travan Blankets and Irazim Textiles- production levels were approximately at 20%.
At its peak around 2000 to 2001, Irazim was producing approximately one million metres of fabric per month.
The Chitungwiza-based company was jointly owned by the Iranian Pension Fund, Jaham Paham with 83% shareholding through its investment arm Saba Jahad Full while IDCZ held a 17% stake.
Zimbabwe’s textile industry, which at its prime was one of the major employers in the country, has been on the brink as fears mount over the closure of more textile firms.
But of late the industry has been on a revival trajectory that has also seen David Whitehead Textiles resuming production.
The textile companies have been operating below 10% of their capacity due to inadequate working capital needed to replace obsolete equipment and stiff competition from cheap fabric imports which have seen the country literally relying on imports.
At its prime, the industry employed about 24 000 people but less than 4 000 are now under its payroll as thousands were rendered jobless.
The downstream industries such as clothing and retail, which fed on textile firms, employed even more.
Similarly, 94% of textile companies were operational but are now down to 34%.
Most textile companies are under judicial management. David Whitehead Textiles, which used to be the largest textile firm, has been under judicial management.
Also under reconstruction order are Merspin and National Blankets while Karina Textiles has also been under judicial management while Cotton Printers, formerly owned by Meikles, was also liquidated 10 years ago.
