AN unnamed Indonesian investor has expressed interest in investing $30 million into textile concern, Merlin, as working capital over five years, NewsDay has established.
BY MTHANDAZO NYONI
According to the minutes of the third creditors’ meeting held on October 18, 2017, the company’s judicial manager, Cecil Madondo of Tudor House, revealed an Indonesian investor wished to inject $30 million into the company.
“He (Madondo) advised that the last avenue he had was one which involved an Indonesian investor, which he advised had offered to raise a $30 million working capital over a period of five years,” read part of the minutes.
“He stated that he had already communicated with its South African based partners, who affirmed their willingness.”
Merlin, which has been under judicial management for over a decade, resumed operations last month, albeit, on a small scale, after one of its creditors poured in $2,1 million minimum working capital.
Madondo recently told NewsDay that in the next few months, the company will start flooding the local market with its products and at the same time making inroads to open up export markets.
In the meeting, Madondo reportedly said once the funds had been secured, $2,1 million would be used for minor repairs and maintenance over a period of five to six months.
He indicated that he had already confirmed orders and had shared the position with some of the creditors.
“The second phase would require $4,5 million over a period of 24 months to be utilised for major repairs, which in his view would be enough for such purpose,” reads the minutes.
He advised that some of the machinery in the firm was obsolete, so there was need for replacement. Madondo advised that most of the machinery was from Switzerland and Germany, purchased long ago.
“He advised that the company was operating from Old Mutual premises and the building was valued at $2,1 million and that Merlin had proposed to acquire the building, but negotiations were still in progress,” the minutes read.
Madondo said Merlin had suggested establishing its own ginning plant at a cost of $4,5 million.
He said he had budgeted $2,3 million to go to prior and post judicial management phases.
“He advised that the reason behind budgeting $2,3 million, whereas creditors worth about $5 million was simply that some of the creditors would be changed into shareholding stake through a scheme of arrangement, that is debt to equity (sic),” the minutes read.
Madondo then asked the court to give him an opportunity to finalise the initiated negotiations to raise working capital and the signing of the joint venture.
He asked to be authorised to make an application to dispose of obsolete machinery, as well as apply for leave to convene a scheme of arrangement meeting within six to 12 months, after the company has started operations.
Madondo asked to be given time to finalise negotiations with investors in line with the proposed scheme of arrangement.