Meikles says reaches agreement with govt over central bank debt
Hospitality and retail group Meikles Limited has reached an agreement with the government over a Reserve Bank of Zimbabwe debt which has been outstanding for two decades, chairman John Moxon said on Wednesday.
The Meikles debt accrued in 1998 from transactions related to the group’s dual listing on the Zimbabwe Stock Exchange and the London Stock Exchange. It stood at $25 million in 1998 but shot up to $47 million at the end of 2013 after the inclusion of interest.
“An agreement with Government has been reached following high level meetings between its representatives, the Reserve Bank of Zimbabwe and ourselves. The final figures now await the signature of the Minister of Finance and Economic Development and the information will be made public thereafter,” Moxon told shareholders at the company’s annual general meeting on Wednesday.
Meikles company secretary, Thabani Mpofu told The Source on the sidelines of the meeting that RBZ had agreed to pay eight percent interest per annum for the period it went into the said debt with the company up to August 2015 and then a five percent interest going forward.
“We agreed to stick to the Debt Assumption Act, so its 8 percent from 1997 and then we compromise, from August 2015 when it was promulgated ( Debt Assumption Act) the interest payment will be 5 percent per annum,” Mpofu said.
In March last year, Meikles said the government had undertaken to repay outstanding funds in terms of the Reserve Bank of Zimbabwe debt assumption act of July 2015.
The Act stipulates that an interest rate of five percent is applied to all creditors under the Act.
Mpofu said the agreement which is not yet signed, will see the RBZ debt revised down to around $48 million although that figure could yet come down.
Previously, Meikles claimed it was owed $90 million in debt and interest by the central bank.
Moxon said following the closure of the debt issue, the group will publish its delayed financial results in a fortnight.
“We had to delay publishing our previous results due to the outstanding government debt issue. Now that it has been resolved, we will be in a position to advance the restructuring and repositioning of the group. We will also use some of the funds to ensure that the Stores segment acquires appropriate inventory,” Moxon said.
He also said net borrowings in the expected results will show a significant reduction following the agreement.
Giving an update on the financial performance of the group, Moxon said earnings before interest taxation depreciation and amortization (EBITDA) for the year doubled while profit after tax were better than the previous year.
Moxon said TM/Pick n Pay performance has been extremely encouraging, especially on the bottom line.
Tanganda recorded an impressive performance in the year driven by good rains and an increase in prices and sales.
“The prices of Tanganda products managed to grow during the year, especially for macadamia, tea and coffee. We have had an increase in performance for Tanganda because new crops have now reached maturity and now contributing,” said Moxon
The hospitality segment, Victoria Falls Hotel also had a good year after completing the first phase of refurbishment. Phase two is set to commence soon.
Moxon said Meikles Hotel’s performance has been encouraging but would get better once there is an improvement in the economy.
“At present, the group charges three star prices for a five-star facility and that’s entirely due to the prevailing economic conditions,” he added.
Moxon said Meikles Mega Market and the department stores, had a good year but the units had been greatly affected by low stocking levels which will, however, improve given the expected proceeds from the government.
Meikles is currently trading under caution relating to an offer made by United Arab Emirates investor Albwardy Investments Limited to buy out the group’s shareholders.
Moxon said discussions around the offer were ongoing and is optimistic that the final position will set the company on a firm path since the shareholder does not want “to dismantle the group but to inject funding.”–source