Zimbabwe Stock Exchange lifts Meikles suspension after court threat-company insists it is owed US$90 million


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Zimbabwe's stock exchange today lifted the suspension of hotel group Meikles Africa after the company threatened to take court action, shelve new investment and a possible listing of a subsidiary.

Meikles, which owns two premier hotels in the capital Harare and the resort town of Victoria Falls, was suspended last week to allow for an investigation on whether it overstated a debt owed by the central bank.

Alban Chirume, the bourse chief executive said the suspension had been lifted but did not give details.

Meikles company secretary Thabani Mpofu said Meikles had planned to challenge its suspension in court today but had received a letter from Chirume confirming its reinstatement.

"We were about to argue our case in court when their counsel communicated that we had been reinstated, which negated the court action," Mpofu said.

John Moxon, Meikles's Executive Chairman said in a statement on the company's website on Feb. 22 that the exchange had not given Meikles an opportunity to defend itself.

Moxon also said the suspension was against the bourse's listing rules and had put uncertainty into expansion plans by the company which also runs the biggest supermarket chain by branches, TM Supermarkets.

South Africa's Pick'n Pay Stores Ltd has a 49 percent stake in the supermarket chain.

"The strategy… which was aimed at further expansion in the subsidiaries, the introduction of more investor capital and possibly to even list one subsidiary on the Zimbabwe Stock Exchange are on hold for the time being due to present uncertainty," Moxon said.

He did not give details but Meikles has started wholesale chain stores, which it planned to expand as well as increase the number of its Pick'n Pay stores from four.

The exchange said Meikles reported in its 2014 full year results that it was owed $90.8 million by the Reserve Bank of Zimbabwe, compared with $40.51 million owed by the bank in 2013, without giving an explanation for the sharp increase.

Moxon said the figures were correct and had been a product of painstaking negotiations with the central bank, which he labelled a "delinquent debtor".

Central bank Governor John Mangudya said he had no comment on the matter.

In a statement published on the company’s website yesterday, Moxon said Meikles had agreed with the central bank on interest of eight percent per annum compounded and backdated to January 1998.

“The Reserve Bank of Zimbabwe has for a long period been a delinquent debtor to Meikles as it has failed to perform in terms of returning the funds owing to Meikles despite demands appropriate to the return of a call deposit,” he said.

Moxon said although they had agreed to the arrangement, the interest gained was at a lower rate than the cost of borrowing to the firm.

Information in the RBZ Bill shows that the central bank’s principal debt to Meikles was $25  882 099.77 in 1998 but shot up to $47 044 440.70 at the end of 2013 after inclusion on interest, charged at a rate of eight percent per annum.

However, Moxon disputed the figure claiming the schedules presented to Parliament on the extent of Reserve Bank of Zimbabwe’s indebtedness to third parties, was “completely inaccurate insofar as the sum owing to Meikles is concerned.”

“The sum due to Meikles had indeed increased to $90 million due to the agreement on interest referred to above,” he said.

He said RBZ had committed 76 million of treasury bills and other payments in writing, but had not yet been received in full, adding that the group was within the 90 percent of achieving its target receipt.

“Put differently the outstanding sum to be negotiated represents less than five per cent of Group gross assets. Noise made by the detractors has not been helpful to the conclusion of this matter,” he said.

The listed firm’s debt issue came under spotlight early this month when Bikita West legislator,  Munyaradzi Kereke, a former advisor to the then central bank governor, Gideon Gono, accused the hotel group of inflating the figure to manipulate its stock price.

But Moxon claims Kereke, “a man unknown to Meikles and who has never had any interaction with Meikles saw fit to publicly accuse Meikles and by default all those mentioned above as guilty of fraud due to his personal but uninformed opinion of the Group Financials.”

Bulawayo South lawmaker and Meikles minority shareholder Eddie Cross, who is also a member of Parliament’s budget, finance and economic development committee, recently came under criticism from the group on allegations of using knowledge gained through public hearings on the debt issue to influence other shareholders during the Meikles annual general meeting held in last October.

Moxon said the move to suspend Meikles from ZSE was based on statements by the two whom he constantly referred to as the group’s “detractors.”

The decision, he added had been implemented without any interaction with Meikles and did not comply with its own rules of engagement.- The Source

(754 VIEWS)

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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