Task team looking to Asians to ‘bail' out textile giant

It is understood the potential investor was in fact approached by the Department of Trade and Industry and is in SA to discuss a deal.

Industrial Development Corporation (IDC) CE Geoffrey Qhena, however, said it was too early to say whether the investment would go ahead and in what form.

Media reports Thursday said that Frame employees received retrenchment letters this week. However, Willie Fourie, who heads the IDC's clothing and textile business unit, said the retrenchment notices were part of a formal process the company had to observe and that talks on the rescue plan were still on.

Qhena could not be reached.

Apart from the primary intention to save jobs, Frame's rescue is also being considered in the context of the effect Frame's closure would have on availability of fabric in southern Africa. Frame has spinning, weaving, finishing and denim divisions, and is the biggest textile operation in southern Africa.

The IDC previously turned down a request by Seardel to intervene and help Frame with a cash bail-out, on the basis that the business was not sustainable.

Industry consultant Joop de Voest said the cotton and allied weaving division as well as the dyeing and finishing business were strategically the most important, as denim could be supplied by Lesotho, which produces 1,5-million metres a month.

The IDC is likely to feature in a new deal, either by taking up an equity stake or providing loan finance. Qhena, however, was adamant the deal needed to make business sense. “We are open to whatever option is put on the table, but it is a little premature to say what our involvement would be. We first have to see what the appetite is and then we need to be comfortable the plan is sustainable.”

Auto industry resuce plan?

In similar vein, the Department of Trade and Industry was due to meet the automotive industry next week and could soon unveil a rescue package for the industry, automotive bodies said Thursday.

The latest round of talks raises hopes that the department might soon reveal the bail-out package for the stricken automotive industry, which is battling with plummeting sales, high costs and recession.

Nico Vermuelen, executive director of the National Association of Automobile manufacturers of SA (Naamsa), said Trade and Industry Minister Rob Davies might be in a position to make an announcement on the possible package of support measures for the industry before the end of this month.

The department set up a technical task team - originally comprising Naamsa, the National Association of Automotive Component and Allied Manufacturers (Naacam), and the department - in late February at the request of the industry.

Vermuelen said the task team had made “good progress” in discussing possible support measures, which would reduce the risk of de-industrialisation, and stabilise employment. Rescue measures may include short term loans for parts suppliers.

Approached for comment, Roger Pitot, executive director of Naacam, said he “did not know” what would be discussed next week. If sales volumes did not improve, the future of these companies would be in jeopardy, Pitot said, noting that some were experiencing a cash-flow crisis.

Source: Business Day

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