Meikles demerger saga ends

to pave way for the separate relisting of the financial group on the Zimbabwe Stock Exchange.

The demerger also gives Kingdom Financial Holdings founder Mr Nigel Chanakira control of the group after a recent agreement with Mr John Moxon to swap their shareholdings in the two firms that were merged in 2007.
Soon after the EGM Meikles chairman Mr Farai Rwodzi declared Meikles and Kingdom had officially demerged saying from now on the two firms would trade separately while other formalities were being regularised.

The demerger would allow the entities to rebuild their values, which were significantly eroded during a three-year battle pitting the former directors of Kingdom Meikles Limited, Mr Chanakira and Mr Moxon, receptively. KML was the resultant entity from the 2007 merger of Kingdom, Meikles, Tanganda and Cotton Printers.

“We have demerged Kingdom and Meikles. They will operate as two separate businesses. This is really in preparation for whatever transaction the shareholders will enter into. We are aware that Nigel, Moxon and the consortium have agreed to swap their shareholding among themselves which gives Nigel control of Kingdom.

“But there are other processes that we still have to follow such as (Kingdom) capital reduction process, which is really a High Court process and it’s a formality, but essentially these two are now separate entities,” said Mr Rwodzi.

He also emphasised that Mr Chanakira would not part with any cash resources on top of the share swap with Mr Moxon as had earlier been reported, which had reportedly been agreed between the two parties.
The separation of the two firms would enable Kingdom to return to trading on ZSE, but would also result in its capital being whittled down by US$22,5 million, which had been extended by Meikles during its marriage to Kingdom.

The funding was used to recapitalised the financial group, but the inevitable requirement for the demerger of the two institutions means the funds lodged with the Reserve Bank have to be lifted off Kingdom’s books to Meikles.

According to details of a private share swap entered between Mr Chanakira and Mr Moxon, the former would exchange his 6 percent shareholding in Meikles for the latter’s 43 percent in the financial services group. Since it was agreed that shareholders in the two firms would maintain the same shareholding in the separated entities Mr Chanakira would see his Kingdom stake rise to 59 percent after taking Loackape and Moxon’s shares.

Loackape Investments, who bought Econet Wireless Zimbabwe’s 10 percent stake in Meikles at the height of squabbles between Mr Chanakira and Mr Moxon, have reportedly agreed to give their stake in Kingdom to Mr Chanakira.

However, sources privy to developments hinted that Mr Chanakira and Mr Moxon might not have really reached finality on the share swap agreement, as the former did not have enough shares in Meikles for a fair exchange. Mr Rwodzi’s emphasis that Mr Chanakira would not pay any money in the share swap arrangement also adds an intriguing aspect to the story as he had earlier said the Kingdom founder would pay cash adjustment.

Understandably, Mr Chanakira, after taking Mr Moxon and Loackape’s shareholding in Kingdom would pay an amount equivalent to Loackape’s 10 percent stake in the ZSE and London Stock Exchange listed firm. Loackape is a consortium of local businesspeople and is made up of Mr Rugare Chidembo, Mr Philip Chiyangwa, Mr Langton Nyatsambo, Mrs Chipo Mutasa and Mr Temba Mliswa who are shareholders in Meikles.

The dispute that led to the failure of Kingdom and Meikles merger, the country’s biggest ever corporate marriage, was precipitated by Mr Moxon’s decision to sell Meikles Cape Grace hotel in South Africa without board approval. No valuation had also been done on the hotel as per ZSE and RBZ regulatory procedure.

In addition, Mr Chanakira reportedly had problems with an amount of US$22,5 million Mr Moxon exported to South Africa for investment until it became apparent the funds would not be repatriated to Zimbabwe.

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