BULAWAYO-BASED textile maker National Blankets is facing imminent liquidation after failing to court a suitable investor to inject fresh capital into the ailing company.
The company, which was placed under judicial management in 2012 due to viability concerns, experienced a drastic fall in demand as the market for woven blankets declined.
National Blankets still uses equipment that was first installed in 1940, early into the Second World War that can only manufacture woven blankets and cannot be configured to produce highly knitted blankets currently on the market.
In a notice to creditors, PNA Chartered Accountants said: “…in anticipation of the company going into liquidation to facilitate the purchase of the company by a potential investor or the disposal of the company’s assets, the judicial manager kindly requests all pre-scheme creditors to visit our office to verify the records we have and all post-scheme creditors up to the 28 of February 2019 to send their claims to our offices…”
Phillip Ndlovu of PNA Chartered Accountants has been in charge of the firm as judicial manager.
The company appeared to be on its way out of the woods when in 2014, creditors agreed that all debt should be converted to equity at a rate of $0,50 per ordinary share.
The creditors, however, were not keen on putting new money into the company, which had borrowed heavily.
It received a $500 000 loan facility from Cabs Bank under the Distressed and Marginalised Areas Fund in 2013, but the money failed to change its fortunes.
The firm also sold off some of its property to pension fund, the National Social Security Authority (NSSA) and settled its debt to the now-defunct Capital Bank and service providers such as Bulawayo City Council, paying a combined total of $2,6 million in 2013.
An insider told NewsDay that investors were not interested in the company due to its unattractive products, which were no longer marketable.
“Investors are not interested. They (judicial manager) haven’t courted any key investor. I think the other challenge is that their product is not that appealing to the market. So any investor who comes looks at that product and then leaves,” the source said.
“Investors would have to pump in a lot of money because they will have to change the type of machinery. Currently, they are producing woven blankets, but the market is now keen in knitted blankets. So now to really diversify into knit blankets, you will need millions of dollars to buy the new machinery.”
“Those debts which put the company under liquidation were all cleared. The company started to accumulate more, particularly statutory bodies like the Zimbabwe Revenue Authority, NSSA; those are the people who are owed a lot of money. The other debt emanated from the Zamco loan,” the source said.
The debt is sitting between $2 million and $3 million while workers are on unpaid leave, the source said.
“Directors are now trying to use one of their companies to buy off and start on a new slate, producing new products completely using new facilities, but I don’t know how feasible that is,” the source said.