TEXTILE company, Merlin, has applied for $5 million funding assistance from government to cover the medium to short-term plan needs while waiting for an investor to pour in $30 million, an official has said.
BY MTHANDAZO NYONI
Merlin judicial manager, Cecil Madondo, in his progress update report presented at the creditors’ meeting held in Bulawayo on Wednesday, said he had submitted an application for funding assistance to the government through the Industry, Commerce and Enterprise Development ministry.
“There were meetings held with Zimbabwe Textile Workers Union and the employees between the 21st and 23rd of February 2018 during which period we escalated preparations for production to resume, and during the deliberations, I was advised that Merlin was invited to submit application for funding assistance as part of government’s initiative to assist distressed companies,” Madondo said.
“We subsequently submitted Merlin’s application through the Ministry of Industry and Commerce offices in Bulawayo and Resident minister Angeline Masuku.”
Madondo said a subsequent meeting was held with Masuku on March 8, 2018 and she recommended that they engage the Industry ministry.
He said a meeting was then set up with the permanent secretary for Industry, Abigail Shonhiwa, on March 21 and during which, the “government pledged unlimited support for Merlin in its endeavour to revive projects of national importance and following the meeting, another application was submitted to the ministry’s Harare offices”
“An injection of $5 million will go a long way to revive the operations and will augment efforts from workers and other local partners who have been assisting in mobilising resources to resume production,” he said.
A total of $2 million would be used for major repairs and maintenance, another $2 million for raw material purchasing and another million would be for working capital.
“The government’s assistance with $5 million will cover the medium to short term plan while in the long term strategic investors will be ideal. A controlling stake will be offered to a strategic investor or partner who has adequate financial resources to implement the long term plan,” Madondo said.
Madondo said the strategic investor was a key component moving forward because it would offer a number of advantages to the company, including injecting foreign currency which would be used to acquire spare parts, new state of the art machinery and equipment and further open foreign markets for the products.
In a letter dated March 27, 2018, Shonhiwa told Madondo that his proposal was being looked into.
“I wish to acknowledge receipt of your application dated 26 February 2018 requesting funding assistance amounting to $5 million. Please be advised that the ministry is looking into your proposal and will respond accordingly,” he said.
Based on the progress made on reviving the company, Madondo said the proposal to liquidate the company by February 28, 2018 was suspended indefinitely.
However, his proposal was crushed by the creditors who felt it was too early for him to do that as the company was not yet profitable.