Merlin seeks removal from judicial management
By Oliver Kazunga
Bulawayo based textile firm, Merlin will later this year apply for removal from judicial management once an agreement with an unnamed institutional investor for $30 million capital outlay is reached.The company, which is one of the city’s oldest textile firms, had been defunct after it was placed under judicial management in 2012.
Last month, Merlin announced that it was re-opening following the implementation of a business rescue strategy involving immediate injection of $2.1 million minimum working capital by one of the firm’s creditors.
The textile concern requires $30 million to operate at full throttle over a period of five to 10 years.
The company is presently making headway towards re-opening as dictated by the resolutions passed at the last creditors meeting on October 18, 2017 that Merlin should be operating on or before February 28, 2018. In a written response to Business Chronicle, the firm’s judicial manager, Mr Cecil Madondo, said:
“In the interim, we have scheduled a meeting for the creditors and members, which will take place on the 28th of March 2018 at Merlin factory premises in Bulawayo for ‘hands on’ progress update.
“In addition to the aforementioned, the strategic plan is that once another agreement is signed with the identified potential investor we will proceed to make an application in terms of Section 191 of the Companies Act (Chapter 24:03) to remove the company from judicial management and then place it under a scheme of arrangement in close consultation with the creditors and members in fulfilment of the resolution passed at the last creditors and members meeting.”Mr Madondo said following the various meetings held with creditors and members during which it was indicated that a strategic business partner had been found, an agreement was subsequently signed with a local company, co-owned by local and foreign shareholders from Singapore, to facilitate the resumption of operations.
Mr Madondo said the agreement was signed towards the end of 2017, which invigorated “manufacturing activities” at Merlin’s factory in Bulawayo.
“When the company closed in 2010 electricity was disconnected due to unpaid bills, we successfully negotiated with ZETDC (Zimbabwe Electricity Transmission and Distribution Company) and they agreed to reconnect electricity.
“The reconnection of power was done, and this has facilitated an assessment of the machinery and equipment for repairs and maintenance work being carried out,” said Mr Madondo.
Water, which had been disconnected at the factory, has also been reconnected by Bulawayo City Council, and payments for the resuscitation of boreholes at the factory in a bid to ensure the utilisation of the company’s internal resources to reduce water consumption costs.
Repair and maintenance works at the Bulawayo factory are in full swing across various departments in readiness to resume full-scale production, which will get underway as planned.
“The Uni-lock machine for the blow room is currently being fixed for the machine to start operating. The preparatory department for weaving has already been tested and is now ready for activity,” said Mr Madondo.
“The mechanics are also attending to the Dye house Long Close machine, which is being repaired and also commissioning of the boiler.”
Last month, the company announced that it had hired about 60 ex-workers in the maintenance department.
Merlin was established in the 1950s and during its former glory days used to employ over 1 000 people. The Chronicle