via Meikles grapples with $100m debt, fails to meet obligations August 29, 2014 by Veneranda Langa
MEIKLES is riddled with a $100 million debt to local and foreign banks resulting in the company failing to pay workers’ dividends under its employee share ownership trust since 2011, Parliament was told yesterday.
The company’s executive director Mark Wood appeared before the Parliamentary Thematic Committee on Indigenisation and Economic Empowerment where he denied claims by employee representatives that at one time Meikles paid pensions in the form of six plates and two nights at Meikles Hotel to retiring employees.
The committee, chaired by Harare Metropolitan Senator Cleveria Chizema (Zanu PF) was also told that the economic meltdown during the period 2007 to 2009 had severely affected the company.
“The trust as it stands has 8 400 000 shares and is entitled to take up another 19 000 000 shares, but there is no funding available and we said they could borrow from the pension fund and to date the trustees have not been able to find any methodology to fund their shares as they did not want to jeopardise their pensions,” Wood said.
“Government owes Meikles $90 million from 1998 and we said if we receive that money in cash we will lend it to the trust to repay the money and also pay money to the pension fund. We also pay interest on the $100 000 000 we owe which is in the region of $12 000 000 per year.”
Masvingo Senator Shuvai Mahofa (Zanu PF) said all companies had experienced problems due to the ailing economy and it was not an excuse for Meikles to fail to pay any dividends to workers.
But, Wood said at the moment there were 250 shares issued and if the company were to pay dividends at 1 cent per share, it would cost them $25 million which they did not have.
“The results of the company show we ran a trading loss of $12 million and at the moment we are not generating any cash at all. However, for people who leave Meikles on retirement we do pay them their leave days and pensions. It is not true that they will be prejudiced of their entitlement and the plates and two nights at the hotel were just an addition to pensions they were entitled to,” he said.
Meanwhile, Schweppes Workers’ Union representatives Richard Maphosa and Abraham Gumunyu told the same committee that the company was making huge profits yet workers were not empowered as they only got dividends of $240 each from their shares since 2011.
“There are six directors who were given 20% shares and employees were given 31% shares. Employees were given a group certificate for the shares and not individual certificates and whenever an employee leaves they cease to be part of the indigenisation programme. The company is indigenised, but there is no empowerment,” Maphosa said.
The Schweppes Workers’ Union failed to show any evidence and the committee said it was difficult to deal with hearsay.