THE country’s sole glass manufacturing firm, Zamp-imglass, is facing liquidation after a potential Mauritian investor pulled out of the deal due to the company’s indebtedness, opting instead to buy its assets.
BY OUR CORRESPONDENT
The investor wanted to inject $10 million into the business.
However, the judicial manager, Winsley Militala of Petwin Executor and Trust, told creditors during a meeting at the High Court on Wednesday that the deal had fallen through and that the only option was to liquidate the company.
As at June 2014, Zamp-imglass’ assets stood at $20,6 million against liabilities of $30,2 million.
“The extent of indebtedness is so large and as such scares potential investors, as well as raising doubts as to future viability.
Keep Reading
- Chamisa under fire over US$120K donation
- Mavhunga puts DeMbare into Chibuku quarterfinals
- Pension funds bet on Cabora Bassa oilfields
- Councils defy govt fire tender directive
“It is, therefore, my considered opinion that the company be liquidated and efforts made for the sale of the assets to the best advantage of stakeholders,” he said.
Militala, who has been the firm’s judicial manager for over a year, said all efforts to revive it had not borne fruit after meeting a number of potential investors showing some “seriousness” and others “time wasters”.
“Faced with such a scenario, Zamp-imglass is insolvent and has not traded even for a couple of hours. People came, did due diligence and walked away,” he said.
He said investors such as Sahara Holdings Limited were prepared to buy the assets but not liabilities.
Sahara expressed interest in acquiring the assets and business of Zamp-imglass in January this year and subsequently signed a non-disclosure agreement.
Sahara’s local representative Industrial Development Corporation (IDC) and the judicial manager toured the plant in Gweru. In July, Sahara advised that it had established an investment vehicle in Mauritius called Ekhaya Investments, to focus on the financing structure of the deal.
Ekhaya would mandate Trustlink International Limited (an asset management company) of Mauritius to package the transaction. Militala said a second tour was conducted leading to Ekhaya appointing a local consultancy firm, Quest Consultants, as financial advisors.
On August 26, Quest Consultants, Militala said, made a conditional offer on behalf of Ekhaya amounting to $3 million in cash for the purchase of book assets of Zamp-imglass as opposed to the business.
“They prefer to go for the assets and this can only be made possible by liquidation. It’s best prudent that the provisional liquidator should widen the takers to get better value to benefit all stakeholders,” he said.
An employee opted for debt-equity swap and to allow the company to operate saying that liquidation would result in losses. In response, Militala said the continued judicial management would erode the remaining assets and that non-secured creditors may walk away with nothing.
The IDC which was represented in the meeting, said government as a shareholder had no capacity to rescue the company. Among the creditors who supported the liquidation was AfrAsia Bank.
Other banks owed are ZB Bank ($3,3 million), Agribank ($630 000), FBC Bank ($1,8 million) and IDCSA-Agribank ($11, 2 million). At the end of the meeting creditors voted on whether or not the company should go into liquidation. The results of the vote will be announced today amid indications that the majority of creditors supported liquidation.
A subsidiary of IDC, Zamp-imglass manufactures glass packaging material for alcoholic and sparkling beverages, food, liquor and pharmaceutical segments. Its major domestic customers included Delta Beverages, African Distillers, Mutare Bottling Company, Straitia Investments, Olivine Industries, Datlabs and E Snell and Company.