Private Equity Firms Eye David Whitehead

By Martin Kadzere
David Whitehead is in serious negotiations with two unnamed investors seeking to inject fresh capital and revive the struggling textile firm, sources familiar with the talks have revealed.

The company resumed operations early this year following two years of inactivity after receiving a $2 million bail out from the Reserve Bank of Zimbabwe.

However, the company was recently forced to shut down its Chegutu factory due to shortages of foreign currency required to import critical raw materials such as chemicals.

It is expecting to resume operations next month after securing some of the raw materials.

The sources said the David Whitehead, formerly listed on the Zimbabwe Stock Exchange, was engaged in negotiations with two investors keen to revive the company.

“Two reputable investors, one of them a local private equity company already with interests in food and confectionery industries are talking to David Whitehead,” said one source who requested not to be named as the matter was sensitive.

Mr Knowledge Hofisi, the judicial manager of David Whitehead could neither confirm nor deny when contacted for comment yesterday.

“Since I took over as judicial manager, we have been receiving enquires from potential investors and we have had discussions with potential investors from as far as Europe and China. Some local investors have also expressed interest in David Whitehead,” said Mr Hofisi.

“It is not a secret that the company needs funding and an investor is needed to bring in the money.

“This will help us deal with legacy issues related to debts as well as modernising the factories.”

DW owes various creditors about $13 million including workers’ outstanding wages.

Formerly listed on the ZSE, David Whitehead de-listed in 2009 following the acquisition of a controlling stake by Elgate Holdings, which has since been reversed after it failed to pay for the stake. DW used to produce 20 million metres of fabric per year while directly employing 3 000 workers and thousands in related industries.

Zimbabwe’s textile sector used to be one of the country’s major employers, providing jobs to about 51 000 people at its peak. By 2005 employment levels had reduced to 28 822 with 22 178 job losses recorded.

Considering the clothing sub-sector alone, employment numbers sharply reduced from 13 500 in 2009 to 12 506 in 2010, then to 8 627 in 2011 and to a mere 4 748 in 2012, highlights a report by Zeparu.

Job losses in the clothing industry between 2009 and 2012 totalled 8 752, which is 65 percent after dollarisation.

The textile industry fared even worse than the clothing industry during the same period with such giants as David Whitehead, Cone Textiles or Modzone, Merlin and Cotton Printers all collapsing.

Source : The Herald

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