NEGOTIATIONS between Bulawayo-based textile firm Merlin and potential investors, including a Japanese investor willing to pour in $30 million to resuscitate operations at the troubled textile company, are expected to be concluded by the end of this month.
Merlin was placed under provisional judicial management in 2011, and in the last quarter of 2014, Merlin major shareholder Delma Lupepe revealed the firm had secured an investor to pour in $30 million to resuscitate the flagging company’s operations.
According to the judicial manager, Cecil Madondo of Tudor House, both shareholders and his office have identified potential investors, but they are yet to choose one.
“Negotiations are still in progress and the outcome will be communicated to the public at the appropriate time. It is envisaged that negotiations with a view to identify a credible investor will be concluded on or before of February 28 2015,” Madondo said.
He said details of their projection in terms of production at Merlin would be determined by the level and quality of investment.
However, Lupepe told Southern Eye Business that Madondo had his own investors in mind that were different from the shareholders.’
He said the Japanese investors they secured would source 50% of the equipment needed to run the company from their country whereas the other 50% would be sourced from Europe.
Lupepe said sourcing new equipment from Japan would take more than eight months and to mitigate that, they had bought some spares for their old machines to start operations.
“Our aim is that next month we should start operating at the weaving side so that we could be generating revenue. Our operating capacity should be at between 80% and 90%. We decided to narrow those potential investors to two or three so that we could choose the best,” Lupepe said.
Madondo said Merlin has the capacity to employ up to 800 workers, but they expect the employment of staff to be on a gradual basis depending on the level of capacity upon resumption of production.
Merlin owes creditors more than $4 million.
Merlin survived liquidation over a decade ago and was placed under judicial management for a third time in December 2011. It suspended production in October 2010 to minimise losses when capacity utilisation fell to a lowly 20%.
At full capacity, the plant at Merlin had potential to process 120 tonnes of lint per month.
Lupepe said Merlin plans to acquire new equipment by the end of the third quarter this year with installation expected to take between six and nine months, after which the firm would have the capacity to produce more than 250 tonnes of products per month.
At its peak Merlin, which produced towels and nappies, employed more than 1 000 workers.