- New owners are in the offing for the Mara Phones factory in Durban, which went bust last year.
- That factory was supposed to be SA's entry into homegrown cellphones.
- Mara was placed under business rescue. The process has now concluded.
- Its creditors, the Industrial Development Corporation and Standard Bank, will consider the business rescue plan and vote on 3 June.
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The Mara Phones factory in South Africa, which went under last year despite heavy government backing, will likely have new owners by 6 June if a vote by its creditors passes next week.
Its creditors, the Industrial Development Corporation (IDC) and Standard Bank, moved to liquidate the entity and put it up for auction in February, subsequently placing it under business rescue in the hope of saving the entity and preserving jobs.
In an update sent to workers last week, Mara Phones’ employment committee told workers that the company is close to clinching a deal with a potential investor.
Whether the deal gets the green light depends on its creditors, who are expected to vote on it on 3 June.
“There is a deal with an investor that is more than likely going to go ahead… The vote with all creditors will most likely take place on the 3 June, and the effective transaction date is the 6 June,” the update read.
Should the vote pass, the new owners will take ownership of Mara Phones on 6 June, and all the existing employment contracts will move across to the new owners.
The smartphone factory, located at the Dube trade port in Durban, was launched with much fanfare in late 2019. President Cyril Ramaphosa was present and touted it for putting South Africa on the map as a tech industry leader.
It received considerable financial support from the IDC, its principal lender, which pumped R238 million into the venture. Total funding for the project amounted to R429 million, and it was granted an additional tax break of R100 million under the now-ended section I12 tax scheme.
Despite Mara Phones’ CEO pledging to inject R1.5 billion into the project, the IDC previously said its shareholders could not raise their total contribution.
The IDC, Mara Phones, and the business rescue practitioners (Genesis Corporate Solutions) would not say who the potential new owner is or how much of the IDC loan was still outstanding.
Following its liquidation, Mara Phones' local management made an offer directly to the IDC to buy back the factory.
Tshepo Ramodibe, head of corporate affairs at the IDC, said the business rescue practitioner’s mandate was to find the most suitable solution for Mara Phones in the long term.
“Ideally, the plan will balance the need to satisfy creditors’ claims with the interest of continuing the factory’s operations and saving jobs, which remains an ideal outcome for all,” Ramodibe said.
He said the business rescue plan would be referred to IDC for consideration in due course. The IDC also reiterated its stance that there exists no case to inject further debt funding into the company.
“The hope that we have is that operations will begin again, and we can all resume working and be part of something big for us and our country,” the update to workers said.