BULAWAYO textile manufacturing firm, National Blankets
(Pvt) Limited, has been liquidated following years of poor performance and
failure to find a good investment suitor in yet another blow to the city’s
industrial revival drive.
Bulawayo High Court Judge Justice Nokuthula Moyo issued an
interim order directing National Blankets to be placed under liquidation after
she was satisfied that the company could not continue operating normally due to
serious financial constraints it is facing.
“It is ordered that the applicant National Blankets (Pvt)
Limited is provisionally wound up, pending the grant of an order referred to or
the discharge of this order. Subject to subsection 27 (1) of the Companies Act,
Phillip Ndlovu of PNA Chartered Accountants is appointed provisional
liquidator,” ruled the judge.
Justice Moyo ordered any interested parties to appear
before the court sitting tomorrow (Thursday) to prove why the granting of a
final order to place the company under full liquidation should not proceed.
The company’s products have been experiencing a drastic
fall in demand as the market for woven blankets declined. The liquidator is
expecting to facilitate the purchase of the company by a potential investor or
the disposal of assets.
In papers before the court, National Blankets said it
resolved to seek 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 with capacity utilisation rising from
about seven percent to 65 percent,” read court papers.
However, the company later faced challenges associated with
loan repayments, prohibitive borrowing costs, labour costs and the general
decline in market due to competition from foreign products.
The company said 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.
National Blankets said the slow uptake of its products also
resulted in the company failing to service loans advanced to it by financial
institutions and the major shareholder, Triumphant Enterprises.
“The company’s business has failed and it is insolvent with
its liabilities exceeding its assets by an appreciable margin such that it
would be reckless not to contain the downward slide,” said the company.
During its peak, National Blankets was arguably a market
leader 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 company, among the second city’s most iconic and
oldest, still uses equipment that was first installed in 1940, early into the
Second World War and can only manufacture woven blankets.
National Blankets appeared to be on its way out of the
woods when in 2014, creditors agreed that all debt be converted to equity at a
rate of $0,50 per ordinary share.
The creditors, however, were not keen on putting new money
into the company, which had a history of borrowing heavily. National Blankets
has been under judicial management since 2012 due to viability concerns.
It received a $500 000 loan facility from the Central
African Building Society (CABS) under the Distressed and Marginalised Areas
Fund (Dimaf) in 2013 but the money failed to change its fortunes.
Also in 2013, the firm sold off some of its property to
pension fund, the National Social Security Authority (NSSA) and settled its
debt to the bank and service providers such as Bulawayo City Council, paying a
combined total of $2.6 million. Chronicle
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