Zimpapers Logo

Happiness Zengeni Business Editor
Meikles shareholders were warned against counting their chickens before they hatch by accounting for $90 million that is due from Government following its assumption of the Reserve Bank of Zimbabwe liabilities as the Debt Assumption Bill has not yet been passed in Parliament.
This comes after Meikles this week put out a notice that it will now get $89 million from the RBZ in the form of Treasury Bills.

In an update to shareholders, Meikles said the RBZ and the Ministry of Finance are presently completing the administrative processes to facilitate the tenure and yield of the TBs.

“The TBs will be based on terms that are marketable by outright sale or as acceptable security,” said the group adding that this is the most significant development in recent years.

The TBs have a 2 percent interest rate/annum with a tenure ranging from three to five years.

The group said it would utilise its new financial flexibility to implement measures that will enhance shareholder value. This includes expansion programmes and strategies relating to TM Supermarkets, Tanganda, Hospitality and Mining will continue with greater urgency given that the major financial restraint has been removed.

Bulawayo South Member of Parliament Eddie Cross warned Meikles shareholders at the annual general meeting yesterday, against expecting the whole $89 million that is owed by the Reserve Bank of Zimbabwe saying the Debt Assumption Bill was still being debated in Parliament and outreach programmes held so far were negative as people did not want Government to assume the debts.

“It’s not yet a bonanza. Even organisations like the Bankers Association of Zimbabwe have presented evidence saying that the Bill was inadequate as it does not give them sufficient protection from legal challenges from clients whose money was confiscated by the RBZ then,” he said.

Mr Cross said it’s most likely that there was no transparency on how Meikles obtained an agreement from Government to the point of being given TBs against an issue that is still before Parliament.

He said according to information Parliament had, Meikles was not owed that much. The RBZ debt schedule gazetted in August shows that Meikles was owed $40,64 million as at September 30 2013.

This was after accounting for 4,68 percent interest on the original amount owed of $24,88 million which was used by then governor Dr Leonard Tsumba for balance of payments support.

In 2011 after the October 2010 demerger with Kingdom Financial Holdings the group recorded balances held by the RBZ as $36,82 million from the unaudited restated 2009 January 1 amount of $35 million. In 2012 the amount was at $38,62 million and then rose to $40,51 million in 2013.

However, at the end of its financial year in March (F14), the group recorded the balance as $90,8 million, a 124,14 percent increase from the prior year’s amount. Meikles said the increase in the amount was as a result of interest negotiations.

However, interest negotiations have not been finalised according to the debt schedule and Government might not be in a position to handle the liability if the same interest rate used in calculating the Meikles debt is used.

“If this is to be followed then the debt could rise in excess of $2 billion and not the $1,1 billion in the debt schedule. Remember that the other 37 creditors would want to follow the same precedence.”

Mr Cross also said questions were being raised why Meikles was getting so much interest while Anglo America which is owed $103 million has not been given any interest.

Officials from both the Ministry of Finance and the central bank have raised concern on where the $90,8 million amount was coming from considering the huge disparity in last year’s figure. Well placed sources within the ministry say Meikles was even willing to go to court over the analysts over the way their corporate governance is handled considering it is also the only company which only has one independent director.

There is also the issue of the $22 million that Meikles Limited transferred to South Africa in 2008, purportedly for investment at a time the group is battling for fresh capital. Some effort was made to recognize, in the group’s accounts in 2011, possibility of recovering 65 percent of the funds, about $11,7 million, but nothing has materialised almost four years on.

The funds, earmarked for future investment in Africa, are currently held by Gondor Capital Limited, a South African registered shareholder entity, held 100 percent by the Moxon Group.

Meikles said, back then, that the purported expansion investment outside the country would mobilise upward of $200 million for capital investments into Meikles Limited and Zimbabwe.

The funds, which later sparked serious boardroom squabbles in the conglomerate, were allegedly transferred to South Africa by Meikles chairman Mr JMoxon, without the full consent of other directors in the group.

However, outcome of litigation, instigated by former chief executive Mr Nigel Chanakira, eventually allowed a recoverable sum denominated in South African rand equivalent to US$11,7 million, later reinstated in the group accounts.

“It is time that the Board facilitated the return of these funds to relieve the pressure on the Group. What have these funds been doing earning nothing all these years? This does not make any sense at all,” said a highly placed source in the group.

“When combined with the unyielding investment in Mentor of $34,5 million; $45 million is the reality of assets shrouded in secrecy and contradictory statements, which change year on year, but never produce the excitement promised,” the source said.