CREDITORS of Archer Clothing Manufacturers last Wednesday finally approved its takeover by Harare-based Paramount Garments, saving it from liquidation, documents from the Bulawayo High Court have shown.
Takeover negotiations between two companies started in 2013 after they initially entered into a cut, make and trim deal.
Under the deal, the Harare company supplied clothing material and labour while Archer provided the working space.
At the first vote in March 2014, 44 out of the 45 creditors approved the Paramount bid, but the one dissenter’s objection delayed the process.
Another attempt to take over the firm suffered a stillbirth after a creditors and members’ meeting that was set for November 5 2014 failed to take place.
Archer Clothing was given up to this month to conclude the takeover by Paramount or risk being liquidated, throwing more than 200 workers recruited in September 2014 out of work.
According to information obtained from the Bulawayo High Court last Friday, 33 out of the 34 creditors who are owed more than $14 million, approved the Paramount bid. The creditor who voted against the bid is owed $3,8 million and is believed to be CBZ.
Commenting on the development, Paramount managing director Jeremy Youmans commended the move.
“We are very grateful about that, but we are still waiting for official confirmation from the court,” Youmans said.
“We are committed in resuscitating Archer and by the end of the year we would have employed 850 people. However, we wonder why this one creditor voted against our scheme.”
The takeover will lead to the revival of one of Bulawayo’s oldest companies. It was established in 1953 and before its collapse was among the largest garment manufacturers in the country.
Paramount Garments has so far committed $2 million in reviving Archer although the deal is yet to be finalised. Archer Clothing needs about $5 million capital injection in the long-term to refurbish property, machinery and to cater for human resources and working capital.
It has been battling operational challenges that saw it being placed under judicial management in 2010 and provisional liquidation in 2014 due to lack of working capital before scaling down operations, leaving hundreds of workers redundant.
Its machinery is outdated and expensive to maintain while the company also had to contend with power cuts and cheap imports.
At its peak, the textile sector used to produce about 135 million garments annually, compared to the current 18,7 million, industry officials say. The industry employed 35 000 workers, compared to current levels of just under 7 000.
– The Source