BULAWAYO-BASED textile firm Merlin’s judicial manager Cecil Madondo has advised the company’s shareholders not to smuggle in an investor saying investors must carry out their due diligence under the supervision of the office of the provisional judicial manager.
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About a week ago, the firm announced that it had secured an investor to pour in $30 million to resuscitate operations, but in a press statement, Madondo explained that this had to be done through the right channels and within the proper legal framework.
“It must be noted that bringing in investors through the backdoor is not acceptable as such deals would be null and void at law since the company is under judicial management,” Madondo said.
“Accordingly, the office of the judicial manager is currently negotiating with several interested parties with the objective of securing a credible investor in the best interest of all stakeholders,” he added.
Madondo also responded to accusations that he failed to resuscitate the company blaming its collapse on the tragic failure of the leadership of Delma Lupepe, who owns Maydeep Investments (Pvt) Ltd, which wholly acquired Merlin in 2004, saying the accusations are misleading efforts to save face by the shareholder who ran down the company.
The Tudor House consultant cited his ability to steer the firm out of trouble when he was appointed its provisional judicial liquidator in 2002 saying he moved it to judicial management and later discharged Merlin from judicial management in 2004 after which it was subsequently wholly acquired by Maydeep Investments (Pvt) Ltd as the new investor.
“It is sad that Maydeep Investments, after taking over the company, did not follow the plan stipulated by the judicial manager as provided for in terms of Section 314 of the Companies Act (Chapter 24:03),” Madondo said.
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“This negatively affected the company’s success coupled with what appears to be gross mismanagement and the apparent lack of effective corporate governance structures by the new board. The company was run down with machinery not being serviced or repaired resulting in operations halting towards the end of 2010.”
Lupepe has criticised Madondo’s appointment as liquidator in the media saying he is based in Harare with no presence in Bulawayo causing the company to incur huge costs for his travel and accommodation.
Madondo dismissed this argument in his statement noting that at the time of reappointment it was never contemplated and was never the intention of the parties that he relocate to Bulawayo indicating that when he managed to resuscitate Merlin the first time he was based in Harare .
“The mandate was to manage the company out of its current state and it is my intention to do that,” he said.
Lupepe accused the judicial manager of indicating he had identified three investors who later evaporated.
In response, Madondo maintained that during the judicial management term he made several efforts to bring investors on board and engaged a number of potential investors.
