Business Reporter
MEIKLES Limited has acquired a 35 percent stake in South Africa’s Mentor Africa Limited by merging Cape Grace into Mentor and converting cash into equity. The group’s executive chairman, Mr John Moxon, said the funds, held by Mentor on behalf of Cape Grace, would be converted into equity in Mentor.
“The transaction will allow the group to unlock            further value in its foreign investments by providing access to assets, which have greater growth prospects than Cape Grace Hotel in isolation,” said Mr Moxon.
In his report for the full year to March 2012, Mr Moxon said the deal, with good upside potential, would position the group in growth opportunities in Zimbabwe while Mentor focuses on investments.
Mentor has a growing and diversified portfolio in South Africa including air service providers, financial services and mining.
This transaction led to the fallout between Kingdom Financial Holdings founder Mr Nigel Chanakira and Mr Moxon before the demerger of Kingdom Meikles Africa.
Meikles and Kingdom merged in 2008 before de-merging 18 months down the line from what was one of the country’s biggest unions.
The sticking point was on the fate of the US$22 million controversially taken to South Africa by Mr Moxon, allegedly for investment.
The funds were supposed to be repatriated to Zimbabwe, but Meikles in June last year indicated that US$11,7 million had been recovered and could be the remainder that is being converted into equity in Mentor.
Meanwhile, the group — yet to go for a fund-raising initiative for recapitalisation — is negotiating with a number of financial institutions for funding.
Mr Moxon said his company was also negotiating with the Reserve Bank of Zimbabwe to free funds held on deposits to retire the group borrowings.
But the group has come up with a new group                  funding policy to deal with short-term local borrowings.
According to the new policy, funding for partly-owned subsidiaries or associates would only be provided in proportion to the group’s percentage shareholding.
But the group said it would continue to fund its investment in retail store debtors from borrowing, or from the sale of the debtors book to a third party.
This would result in the group retaining minimal and inexpensive short-term borrowings from local banking institutions.
“These factors together with the improving                       performance in the divisions, and further profits from the region, will enable the resumption of dividend payments to group shareholders,” said Mr Moxon.
During the 12 months to March 2012, the hotel group turned over US$354,1 million and finance costs were US$8,5 million.
Meikles lost US$3,4 million as agricultural divisions suffered frost in winter and unusual adverse weather patterns.