Zimglass faces liquidation

Bus2Business Reporter
ZIMGLASS creditors have given judicial manager Mr Winseley Militala two more months to find investors or alternatively proceed to liquidate the glass manufacturing company.   At the last creditors’ meeting in October last year, creditors resolved to give Mr Militala six months to March this year to find a suitable investor, but nothing materialised.

Zimglass was placed under provisional judicial management in August last year and remains closed. Well placed sources told The Herald Business that while Zimglass has managed to engage the investor, it was unlikely that the company would seal the deal by before end of May.

“There is an agreement that was signed but the potential investors seem to have gone dead,” said one source who cannot be named for professional reasons, adding that it would be very difficult to “seal a deal” within two months given by the creditors.

Mr Militala confirmed yesterday that the creditors gave him two more months to find an equity investor.

“At the last meeting I was given two months by the creditors to find an investor or to file for the liquidation of the company,” said Mr Militala.

In the second report presented to creditors and members last month, Mr Militala said while Zimglass presented an investment opportunity for fund holders in the region, they were reluctant to undertake expensive pre-investment work in the absence key fundamentals.

These include competitive advantages such as infrastructure and the cost of production.

“Notwithstanding, and having succeeded in mitigating some of the concerns of the investors and adverse perceptions, the judicial manager has managed to engage potential investors,” said Mr Militala.

“A potential non disclosure agreement has been signed with a Malawi registered regional company, which is now comfortable enough to conduct (plant) tours as a prelude to a due diligence exercise.”

He said the investor had been in talks with a number of potential customers of Zimglass, including an international brewer with operations in the region, with view of securing off take agreements in the event the deal is finalised. The judicial manager has been assured that the negotiations were at an advanced stage and “promising.”

“The judicial manager believes that recapitalisation through equity investment is the only way to adequately address the issue of insolvency and returning to profitability,” said Mr Militala.

Zimglass has installed monthly capacity to produce about 240 tonnes of glass material for making bottles of beer, soft drinks, food, pharmaceuticals as well as kitchenware.