BULAWAYO — Textile company National Blankets needs $3,5 million to recapitalise and ward off competition from South African products flooding the market, The Source has established.
Recently, the creditors of the struggling firm agreed to convert their undisclosed debt into equity, a deal which will take the company out of judicial management.
The creditors held a meeting with shareholders last month where it was agreed that all the debt would be converted to equity at the rate of $0,50 per ordinary share.
The creditors exclude Capital Bank and service providers such as Bulawayo City Council, who were paid a combined total of $2,6 million after the company sold off some of its property to National Social Security Authority last year.
Judicial manager Thamsanqa Siwela told The Source that the firm was currently in talks with the High Court in a bid to finalise the equity deal. He said the firm needs a lot of funding to be fully revitalised.
“National Blankets needs a lot of funding and, in the meantime, needs something like $3,5 million for recapitalisation.
The money will also help the firm to be able to compete with its competitors, especially from South Africa,” Siwela said.
National Blankets, one of the country’s largest textile firms, was placed under judicial management in 2012 following viability constraints.
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The company has capacity to produce 60 000 blankets a month but current production is estimated at between 15 000 and 20 000.
Due to liquidity challenges and use of antiquated machinery most local textile companies have failed to compete with imported products. Several Bulawayo-based textile firms have closed shop in recent times, under pressure from imports and lack of capital.
– The Source
