RBZ debt stalls Meikles indigenisation

Published: 22 October 2013

Diversified group Meikles Limited says it will be able to fully implement its approved indigenisation empowerment plan when the Reserve Bank of Zimbabwe (RBZ) repays its $66,5 million deposit.

The funds, initially $40,5 million before accruing interest, were a deposit held by the central bank under Meikles's foreign currency account.

Over the years, the central bank has failed to reimburse Meikles due to lack of financial capacity coupled with an acute liquidity crisis.

Meikles plans to provide loan funding to an Employee Share Ownership Trust (Esot), as part of its indigenisation compliance plan, to enable it to purchase up to 28 million shares in the group.

This will be at a subscription price calculated on the basis of the weighted average Meikles shares over 30 days prior to the issue.

The group will seek shareholders' approval of the transaction at an extraordinary general meeting next month.

"This assistance will only be extended when the company's funds on deposit with the RBZ are repaid," said Meikles' company secretary Andrew Lane-Mitchell.

In 2011, the diversified concern's shareholders approved that 24 million unissued shares be placed under the control of directors who shall have the authority to issue the shares to Esot.

"The 24 million unissued shares constitutes 8,91 percent of the issued share capital of the company. The ministry of Youth Development, Indigenisation and Empowerment have approved the company's provisional indigenisation plan on the condition that 10 percent of the issued capital be issued to the Trust," said Lane-Mitchell.

He added that to meet the condition, a further four million need to be issued to the Trust in addition to the share already authorised to be issued, according to the resolution passed in this year's annual general meeting held in August.

"So, in total 19,581,490 shares will be placed under the control of directors.

"This total together with the 8,418, 510 shares already issued to the Trust will constitute 10 percent of the company's issued share capital," said Lane-Mitchell.

In August this year, the company said negotiations to recover the funds owed by the RBZ were nearing conclusion as the group sought to improve profitability.

"Progress has been made in getting better terms on the funds.

"The discussions are nearing conclusion and will result in a higher interest being accrued on the deposit, with a retrospective implication," said the company in a statement.
- dailynews