Pemba, Mozambique, Aug. 6, 2025 (Lusa) - The buildings of the former Plexus Cotton Ltd, which was one of the main cotton companies in Mozambique, which the court intended to sell, will go to private negotiation after failing to attract bids at public auction, as part of the ongoing insolvency proceedings.
“We had no bids and the auction was declared void, so we will wait for the next auction. In fact, it will not be an auction as such, because it was decided to negotiate privately to see if a slightly higher figure can be obtained than half of what would have been obtained at the second auction,” the insolvency administrator, Auxílio Nhabanga, told the media.
The Cabo Delgado Judicial Court had announced that it would begin selling ten buildings and factories belonging to the former Plexus, one of Mozambique's leading cotton companies, at a public auction on Tuesday, hoping to raise €6.6 million.
At issue is the insolvency proceedings of Plexus Cotton Ltd, formerly owned by a British group, whose operations were halted in 2022, leaving thousands of cotton producers in Cabo Delgado unable to sell their product, in addition to huge debts, according to the recovery plan released the following year, of 515 million meticais (€6.9 million).
The British group pointed to the damage caused by successive cyclones that affected the region and the impact of armed violence in Cabo Delgado to justify its deteriorating financial performance since 2016 and the end of operations in 2022.
After the court failed to sell the assets due to a lack of buyers, they will now be put up for private negotiation with sealed bids, a decision taken today after a meeting between the insolvency administrator, the creditors' committee and the judge in the case.
The insolvency administration has given assurances that after the sale of the assets, priority will be given to the payment of outstanding wages, with the group of creditors also indicating that workers “will have priority in the payment process”, explained Benedito Cossa, representative of the creditors.
With the crisis at this company, it is estimated that around 200 workers are owed wages and that 50,000 cotton producers in Cabo Delgado have been struggling since 2022 to sell their raw materials, which they had previously delivered to Plexus.
The sale notice provided for the sale of ten groups of buildings in various locations in Cabo Delgado, which were included in the assets of the former brand, with a total base value of 488.8 million meticais (€6.6 million).
In 2023, the Cabo Delgado Judicial Court revealed that 95% of the known debts had been contracted by Plexus with four banks: Moza Banco, BCI, Access Bank and Société Générale.
Moza was then owed 197 million meticais (€2.7 million), BCI 127 million (€1.7 million), Access 110 million (€1.5 million) and Société Générale 58 million (€813,000).
In addition to the banks, 3.4 million meticais (about €48,000) in unpaid wages were identified, with the rest of the debt owed to the tax authorities and social security.
On 17 May 2023, an agreement was announced with Portugal's Felpinter to take over the running of Plexus Cotton Ltd's business, including two processing units with a capacity of 45,000 tonnes per year.
Cotton exports, one of Mozambique's main cash crops, accounted for US$120.9 million (€103 million) in the last five years, but fell by more than half in 2024, according to official data reported by Lusa in July.
According to a balance of payments report from the Bank of Mozambique, exports fell to US$14.2 million (€12 million) in 2024, the lowest annual figure in at least five years.
Cotton production in Mozambique grew 2% in 2024, compared to the previous year, to 24,000 tonnes, but failed to meet the targets set for the sector, according to data from the Ministry of Finance on budget execution.
The cotton production area in Mozambique grew from 95,097 hectares in 2023 to 96,523 hectares last year.
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