Merlin viable, says judicial manager

TEXTILE firm, Merlin Limited, which is emerging from the woods, says it needs an estimated $17.1 million to set up a ginnery that is expected to add impetus to its survival in the long-term.

The company, which was placed under judicial management in 2012 before shutting down, resumed production in February this year after coming up with an investment plan and turnaround strategy.

Merlin recently announced that it has secured yarn dying contracts from two Zimbabwean companies with export orders and based on the textile firm's capacity, the project would take at least 18 months to complete running three shifts a day.

Last week, the textile giant's judicial manager Mr Cecil Madondo told a creditors' meeting in Bulawayo that they have applied to Government for $5 million working capital assistance for raw material procurement, repair and maintenance of production equipment.

Apart from the $5 million needed to boost productivity to competitive levels, Mr Madondo is on record saying the company needs a capital injection of up to $30 million in the long-term and was presently courting a foreign investor.

Due to a Non-Disclosure Agreement with its partner, the textile company is at present not able to reveal the investor.

Mr Madondo told the creditors that the investor would be required to buy land and build as well as replacing antiquated plant and setting up the ginnery.

"The company needs to set up a ginning plant to complete the production cycle, which would cost an estimated $17.1 million," he said.

Mr Madondo expressed optimism that with the amount of work and resources already injected into the business so far, there was no longer scope for liquidation in the short-term.

"We believe that the company is viable and with coordinated efforts from all stakeholders, the company can be resuscitated.

"The company was once in this situation as a result of financial distress and undercapitalisation, but managed to trade its way out," he said.

It is hoped that within 12 months of re-opening, Merlin would move out of judicial management.

It is also envisaged that by setting up a ginning plant, this would go a long way in reducing production costs while increasing the value of the business through additional revenue from lint sales and by-products such as seed oil and animal feeds.

Through the ginnery, Merlin focuses on producing and selling yarn, which is on demand locally and in the region.