The Sunday News
Roberta Katunga Senior Business Reporter
BULAWAYO-BASED textile firm, Merlin, is still yet to get an investor in spite of several efforts by the judicial manager to attract investment and negotiations with various investors including one from South Africa.According to a document in possession of Sunday Business, Bulawayo North representative in the House of Assembly, Mr Eddie Cross, offered assistance to bring investors and through his efforts, a South African investor has shown interest in the troubled textile firm.
Judicial manager Dr Cecil Madondo said they were engaged in discussions with the investor (name withheld as officials fear jeopardising the deal) and had since requested specific information to help in their assessment and a report was submitted to them.
“We sent a comprehensive report on state of machinery at Merlin including installed capacity and current capacity; we also included the quality of yarn and other finished products that can be produced at Merlin.
Once they are satisfied they intend to fly over to Merlin and assess the plant and machinery,” said Dr Madondo.
He said Sino Zimbabwe had also shown some interest in investing in Merlin and help the textile firm resume operations.
Sino Zimbabwe is one of the leading cotton ginners in the country and they purchased machinery and equipment from Scottco to expand their operations.
Dr Madondo said he was hoping to finalise the arrangement within the next few months.
In an email to Dr Madondo, Mr Tararama Gutu acting on behalf of Sino Zimbabwe requested for guidance on making investments in Merlin.
“Following our increased capacity at spinning from the purchase of Scottco assets, we find it synergistic to value add our yarn products possibly through Merspin Limited,” read part of the email.
In a follow-up email, Mr Gutu advised that they would be able to supply about 18 tonnes (full truck load) of cotton yarn a month to the textile company and requested information on additional inputs required to enable Merlin to resume weaving and finishing operations.
Sino Zimbabwe, in their correspondence, seemed eager to help in the resumption of operations.
“How soon can we expect Merspin to resume operations if operating supplies were made available?” asked Mr Gutu.
Dr Madondo said to date they had negotiated with various suppliers for credit supply of consumables such as coal, packing, dyes and chemicals.
Merlin requires about US$1,25 million in the short term to carry out repairs and maintenance and to purchase raw materials.
The company will require additional capital to carry out major repairs and maintenance, purchase the land and buildings in the medium term estimated at $3,6 million.
“The long term objective is to replace obsolete plant and machinery with an estimated $9 million required. We believe that the company can be rescued to preserve employment and benefit the economy as a whole,” said Dr Madondo.
Merlin survived liquidation over a decade ago and was placed under judicial management for the third time in December 2011.
It suspended production in October 2010 to reduce losses when capacity utilisation fell to 20 percent.
Last year, judicial manager Dr Madondo was charged with seeking investors following a meeting of creditors and members at the Bulawayo High Court.
