Former David Whitehead Textiles Ltd (DWTL) chief executive officer and majority shareholder Edwin Chimanye has disposed of his stake in Zimbabwe’s largest garment making firm.
Alongside his associates, Mr Chimanye sold a 21,31 percent stake to a yet to be known investor. Mr Chimanye’s holding was 12,94 percent while his associates held 8,37 percent.
“The deal was concluded recently and all former shareholders are now out,” said one source who declined to be identified because is not allowed to talk to the press.
In 2002 Lonrho Africa disinvested from the textile industry in Zimbabwe and a DWTL management consortium, comprising senior managers, spearheaded the acquisition of 88 percent of the firm’s issued and fully subscribed ordinary share capital.
The acquisition was made through an investment vehicle called Guscole Investments. Guscole Investments consisted of Mr Chimanye, Ernest Chivaura, Ian Cripps, George Maulidi, John James Fergusson, Oliver Gwaku, and Ms Daphne Ritson.
DWTL, however, began facing challenges around 2004 when the company, weighed by operational constraints and saddled with huge debts, was first placed under judicial management.
Poor management was also blamed for the collapse of the company. At the time the company was first placed under judicial management, Mr Chimanye was the CEO.
Since 2004, DWTL remained under the court-sanctioned reconstruction under three different administrators. Dr Cecil Madondo of Tudor House Consultants was appointed in 2005 and managed the company until 2008 when the new investors Elgate Holdings took over. Two years later, Elgate applied for another judicial management after the former blue-chip plunged into another financial crisis.
In 2014, DWTL was saved from liquidation after the High Court granted the final judicial management order with Mr Hofisi being confirmed as the final judicial manager.
The eight-year-long hunt for an investor ended in May 2019, when Agri Value Chain Zimbabwe (AVCZ) acquired a majority stake in DWTL. The shareholding acquired by AVCZ was previously owned by Elgate Holdings, a vehicle fronted by Mr Andrew Toendepi, which lost its 51 percent stake after failing to fully pay for the shares more than a decade after signing a share subscription agreement.
The agreement was terminated in April 2019 on the basis of “non-performance” by Elgate when the High Court ruled that the concession for the purchase of the shares be revoked.
In terms of section 30 of the company’s articles association, “any shares forfeited shall be deemed to be the property of the company, and the directors may sell, re-allot or otherwise dispose of the same in such a manner they think fit.”
DWTL held an extraordinary general meeting on Tuesday and approved the appointment of Mr Pradum Ganeriwal, Mr Sanjay Sarkar, Mr Rodreck, Musiyiwa, and Mr Bruce Mawere as directors of the company, effective 6 April 2022, being the date the company was removed from judicial management by an order of the High Court.
In his remarks at the EGM, outgoing judicial manager Mr Knowledge Hofisi took the opportunity to express his appreciation for the support he got from various stakeholders during the period he was the final judicial manager of the company.
Mr Hofisi thanked the Government, particularly the Ministry of Industry and Commerce for the support and the Reserve Bank of Zimbabwe’s unit ZAMCO which advanced a loan to the company at a crucial time. He highlighted that there has been a reconfiguration of shareholding in the company.
At the time of his appointment, DWTL shareholders were predominantly individuals, making it difficult to raise funding. The current major shareholders were institutions led by AVCZ.
Mr Hofisi also thanked previous shareholders for agreeing to sell their holdings to the institutional investors, saying this helped to solve outstanding shareholding issues.
He advised the meeting that before his appointment the company had at some point been recommended for liquidation. A representative of AVCZ urged the new board to urgently take all the necessary steps including restructuring the company.