Seardel team may split group to save ket assets

Plans for a joint venture, involving the Industrial Development Corporation (IDC), the National Empowerment Fund (NEF) and Seardel, to keep these assets a going concern have been initiated.

Trade and Industry Minister Rob Davies and his Economic Development counterpart Ebrahim Patel yesterday met strategic stakeholders — including trade union representatives, the IDC, the NEF and the management team of Seardel — to report on the rescue plan's progress.

Apart from job protection, the task team would also consider the effect the loss of fabric manufacturing capacity would have on the broader clothing and textiles industry, said the Trade and Industry Department's chief director for industrial policy, Nimrod Zalk.

“What is on the table is that we are assessing the assets that are in a special purpose vehicle and looking at identifying which product lines are potentially sustainable,” he said.

Technical work would now be undertaken, mainly by the IDC and the NEF, to preserve capacity and “as much employment as possible”, Zalk said, indicating that shareholders' interests would have to take a back seat as the task team thrashed out the rescue plan.

This suggestion might be unpalatable to some shareholders but the South African Clothing and Textile Workers' Union (Sactwu) is itself a majority stakeholder in the embattled group, through its investment arm's stake in the holding company, Hosken Consolidated Investment (HCI).

Zalk said the amount that would be rolled out by the IDC would not be large and that a deal very much hinged on private sector participation.

“We cannot contemplate DFIs (development finance institutions) coming in and buying up all the equity.

“There has to be private sector involvement,” he said, citing a significant role for Seardel.

However, the state did not discount the possibility that other private sector players might become involved to keep Frame afloat. This could see manufacturers, and possibly even retailers, consider buying up strategic assets.

Source: Business Day

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