Meikles takes RBZ to court over debt

via Meikles takes RBZ to court over debt | The Source February 17, 2014

Diversified group, Meikles Limited, has taken the Reserve Bank of Zimbabwe to court in a bid to recover $89 million owed by the central bank.

The debt was accrued from transactions related to the group’s dual listing on the Zimbabwe Stock Exchange and the London Stock Exchange. The company said the funds were critical in improving its working capital as well as to finance its indigenization and empowerment deal.

Last year, Meikles Limited shareholders approved the allocation of 10 percent of the company’s shares to employees in a bid to comply with Zimbabwe’s empowerment law which requires foreign-owned firms to sell 51 percent stakes to local blacks.

“In December 2013, legal action was instituted against both the RBZ and the Ministry of Finance and Economic Development to secure the repayment of the deposit held by the RBZ,” the company said in an interim management statement for the nine months to December.

“There are individuals who recognize the need to facilitate a solution to this issue to enable the Group to access these funds which are due. The Group is appreciative of these proactive efforts. However, there are also individuals who are frustrating a resolution to this issue. Their motivation is uncertain but their intransigence is placing the Group and its stakeholders at risk. The legal action has been taken in an attempt to hasten and secure a resolution,” Meikles said.

It did not elaborate.

Meanwhile, the group’s retail division reported a marginal growth in turnover for the nine months to December due to weakening consumer spending.

The company also warned of deflation as the economy continues to underperform. Zimbabwe’s consumer inflation rose marginally to 0.41 percent on an annualized basis in January, from 0.33 percent in December.

Sales and operating margins in TM Supermarkets (TM), though comparable to historical levels, are under pressure due to lack of spending power by consumers but have benefited from the growth in the service areas, it said.

“Zimbabwe is on the verge of entering a deflationary period as year on year inflation was 0.33 percent as at 31 December 2013, particularly with regard to foodstuffs. Aggregate demand continues to fall as the liquidity situation has remained constrained,” the company said.

Meikles also announced plans to start mining chrome in a bid to widen revenue inflows. The company formed Meikles Centar Mining Limited in a joint venture with a foreign partner, Centar Mining, a Guernsey-based investment group created by former JP Morgan banker, Ian Hannam.