By Oliver Kazunga
Defunct giant textile firm National Blankets Limited has come out of judicial management and dodged imminent liquidation after shareholders paid all the creditors their dues that ran into millions of dollars.
The company was placed under judicial management in 2012 following viability concerns. The High Court in Bulawayo then issued an interim order in 2019 directing National Blankets to be placed under liquidation after the court was satisfied that the company could not continue operating normally due to serious financial constraints it faced at the time.
Speaking by telephone, National Blankets major shareholder, Mr Tich Mujuru, said the company has emerged from the woods and would next week convene a shareholders meeting in Bulawayo to map the way forward.
“As a major shareholder, all l can say for now pending our shareholders’ meeting set for the 21st of this month is that National Blankets has come out of judicial management and is out of liquidation after we paid all the creditors,” he told Business Chronicle.
“We have a plan, which we will propose at our shareholders’ meeting that will determine how we can proceed with the revival of National Blankets,” said Mr Mujuru.
According to a legal notice on Tuesday, the planned meeting would be convened at the company’s factory in Bulawayo in the morning. The agenda of the upcoming shareholders’ meeting include appointment or confirmation of a new National Blankets’ board as well as discussions on working capital raising initiatives, legal opinion on the value of shares and classification of the loan advanced by the majority shareholder (Triumphant Enterprises) to rescue the company from liquidation.
“The meeting will be asked to consider the following: adoption of the former judicial manager’s closing accounts, which will become the opening accounts of the company going forward,” reads part of the notice.
As part of its revival strategy, National Blankets has sought an equity investor, Triumphant Enterprises, to partner as a potential investor.
After an agreement was reached, Triumphant Enterprises purchased modern machinery from Europe, providing access to foreign currency with which to acquire raw materials.
Following the acquisition of new machinery and access to foreign currency, production improved as capacity utilisation rose from about seven percent to 65 percent.
However, National Blankets later faced challenges associated with loan repayments, prohibitive borrowing costs, labour costs and the general decline in market due to competition from foreign products.
A loan of US$1,2 million, which was long term, was recalled with the result that capital, which would have been available to retool and purchase raw materials, was used to retire the loan, depleting working capital.
The company has said that the slow uptake of its products resulted in it failing to service loans advanced by financial institutions and the major shareholder, Triumphant Enterprises.
National Blankets was one of the companies in Bulawayo that received funding under the Distressed and Marginalised Areas Fund (Dimaf) where it secured a US$500 000 loan facility in 2013.
However, the money could not change the fortunes of the textile concern.
Also in 2013, the firm sold off some of its property to the National Social Security Authority and settled its debt to some of its creditors that included Bulawayo City Council, paying a combined total of US$2,6 million.
At its peak, National Blankets was one of the market leaders in the blanket manufacturing business enjoying a 70 percent domestic market share. The company was also a major exporter of textile products to the Sadc region.
The textile firm, among the second largest city’s most iconic and oldest, had its first equipment installed in 1940. The Chronicle