via Zimbabwe government stops David Whitehead liquidation February 10, 2014 By Tarisai Mandizha NewsDay
GOVERNMENT has introduced a motion to stop the liquidation of troubled lint-processor, David Whitehead Textiles, saying the move would have adverse effects on workers, goods and services in the country, a senior government official has said.
Industry and Commerce deputy minister Chiratidzo Mabuwa told Parliament recently that government was mulling moves to stop the proposed liquidation of David Whitehead Textiles.
This was after the company’s recently appointed judicial manager recommended liquidation of the textile firm which is owned 52% by Aldgate Investment.
“In this case, we are encouraging the company to look for investors and so far we have investors who are showing interest in the company,” Mabuwa said.
“I should mention that we are discouraging the liquidation and we prefer to a takeover by new investors and this is the dialogue that is currently taking place.”
She said if the company went into liquidation, employees currently occupying company houses would face eviction as these properties would have to be sold as part of the liquidation process.
“The issue is that there is a 52% stakeholder, who is steering the option of liquidation and what we are negotiating with the 52% stakeholder, who is a company and not an individual, is that let us not opt for liquidation, but for takeover,” she said.
She added that assets sold during liquidation do not normally fetch market value, moreso when the property market is depressed, like the current status quo.
David Whitehead Textiles, which used to be the largest textile firm in the country and the largest employer in the textile industry, with operations in Chegutu (the weaving plant), Kadoma (the spinning plant) and Gweru, was for the second time placed under judicial management in December 2010, having gone through reconstruction between 2005 and 2008.
At its prime, the clothing and textile industry in Zimbabwe used to employ 24 000 people and the number has since declined to 4 000.