Sigwele�s Last Kicks To Salvage Milk Company

Monkagedi Gaothobogwe | Monday October 6, 2014 06:59

Unpaid workers have resolved that liquidation, paving the way for prospective buyers to conclude the deal, is the way to go.

In July unpaid workers got a court order from the Industrial Court to auction the company and pay themselves.

However, minority shareholder Sigwele, could provide a spectacle in court today, as he attempts to convince the court that he is capable of buying out majority shareholders, CEDA, whose 98 percent stake is equivalent to over P85 million.

Today is the date for the final liquidation hearing which is expected to pave way for the creditors, majority of whom are banks and suppliers of raw materials, to seize the company and sell it to the highest bidder to recover their debts. CEDA will also be rubbing their hands in glee.

Dr Sigwele opened the milk company with his Zimbabwean partner back in 2007 but the company ran into the ground when he was executive director, despite lucrative tenders of over 300 million flowing in from government in the form of a school feeding programme.

Today Sigwele remains a minority shareholder with shares of 0.06 percent, while CEDA owns over 98 percent of the company after it converted its debts into equity.

In fact as the matter goes into the final hearing today, CEDA has decided not to challenge the liquidation process.

The Monitor understands that the milk company workers decided that putting the company under liquidation was a better evil than auctioning its assets.

It is the workers who applied to the Court and got a provisional liquidation order on August 20 this year.  The provisional liquidation order ultimately cancelled the auction which would have gone ahead on September 4.

In their arguments the workers feel that liquidation is better than auction in that it preserves the value of the company while waiting for the prospective bidders to complete the process.

Delta Dairies is not short of admirers with three milk giants, including two South African companies having firmly registered their interest to buy the plant.

Although CEDA early in the year instructed management to find buyers for the plant, the CEDA board has been showing lack of a backbone in enforcing the management recommendation after prospective buyers were made to wait for a whole year.