RBZ to pay US$87m Meikles debt

via RBZ to pay US$87m Meikles debt 08/01/2014 NewZimbabwe

MEIKLES Limited will this year retire all local short term debt, fund the Employee Share Schemes and resume dividend payments once the Reserve Bank of Zimbabwe (RBZ) repays a US$87 million owed to the group.

The debt has been growing since 1998 when it originated and has accrued interest amounting to about US$ 27 million since the economy was formally dollarized in February 2009.

The debt originated from deposits made to RBZ following Meikles listing on both the local bourse and the London Stock Exchange in 1996 and the raising of funds from a number of substantial investors for the benefit of the company.

Commenting on the funds held on deposit at RBZ when presenting the company’s half year results for the year to September 30 2013, Moxon said there were indications that a solution to the long standing deposit at the Reserve Bank may be forth coming shortly.

“When this solution is achieved, the group expects to retire all local short term borrowings, and if necessary assist group companies with the redemption of term loans on due date,2 he said.

Moxon added: “There will be funding available to support the Employee Share Schemes, (Once the money is repaid) which are an important part of the group’s indigenization processes.

“Due to liquidity constraints, capital expenditure and working capital requirements, the group is unable to pay an interim dividend. However, on repayment of the RBZ deposit there should be sufficient capacity to resume the payment of dividends.

“A solution to this outstanding issue is undoubtedly the most important matter for all stakeholders in the group and has been the single largest impediment to growth and stability.”

Meanwhile, the second six months of the financial year ending March 2014 will be dominated by growth in non-trading income and primarily investment income.

The group’s is anticipating gains in investments that would be accounted for in the year end financials.

“These gains may include the South African interests, where the group has substantial performance expectations, and a first contribution from the group’s mining activities,” said Moxon.In the short term, Meikles expects its retail divisions to continue battling a demanding environmental challenges particularly tight market liquidity conditions and low disposable incomes.

“Tanganda has had an excellent start to the agricultural growing season and the weather forecast for the remainder of the season is positive. The newly renovated Meikles Hotel, together with the renovation of the Victoria Falls Hotel will provide a better performance platform for the hospitality division,” Moxon said.

During the period under review, Meikles revenue rose slightly to US$190,2 million from US$189,4 million last year. Earnings per share rose to 14,37c from 0,26c. Profit for the period was US$37,5 million from US$767,000.