David Whitehead fails to account for $2 million bailout

By Oliver Kazunga

The revival of operations at David Whitehead Textiles is in limbo after the judicial manager failed to account for the $2 million bailout the ailing firm received from the Zimbabwe Asset Management Company.

Last year, the Zimbabwe Asset Management Company (Zamco) advanced $2 million to the Chegutu-based textile company for the resuscitation of operations.

Speaking in Parliament last week, Chegutu West legislator Dexter Nduna said:

“We were hoping and keeping our fingers crossed that because there has been an input into the cotton industry by Government that company (David Whitehead) is going to be resuscitated.

“It has not been like that. What we have seen is that the judicial manager has not even been able to account for the US$2 million that was given by Zamco. The creditors have sat and we do not want to go through that route again”.

He said despite all the support Government has given to the cotton industry such as taking over the US$68 million Cottco debt with a view to reviving the cotton industry as well as giving free cotton inputs to farmers totalling US$130 million, this has not helped in reviving David Whitehead.

“The value of David Whitehead is about US$15 million but its liabilities are US$20 million,” said Nduna.

The Chegutu legislator hoped that the proposed Business and Entities Bill would go a long way in giving a robust direction in terms of making sure that companies are resuscitated and not unnecessarily put into liquidation.

“If this Bill passes, it is going to see that such entities of a strategic nature and that are of a very high value nationally do not unnecessarily go under, by making sure that we employ the right people to turn around these entities, because they are of high value and national strategic importance,” he said.

The ailing textile firm used to employ 2 500 people in Chegutu before it collapsed in 2011 after being placed under judicial management since 2006.

When operating at full throttle, David Whitehead has the capacity to produce about 20 million metres of fabric annually.

At its peak in the 1990s, the Zimbabwe’s textile industry was employing about 51 000 people but the figure has so far whittled down to less than 7 000 largely on the back of economic challenges the country has been reeling under for close to two decades.

However, under the Second Republic, it is hoped that Zimbabwe’s economy will emerge from the woods as the new political administration has adopted the “open for business” mantra as well as engaging the international community to improve relations with the rest of the world. The Chronicle