Business Reporter
Zimre Holdings Limited (ZHL) has terminated negotiations for the disposal of certain assets held by the company as the operating environment has increasingly become unstable. In a notice to shareholders, ZHL Company Secretary, Lovemore Madzinga said negotiations over the disposal of certain assets (widely believed to be its 30 percent stake in NicozDiamond) referred to in the cautionary statement first published on August 16, 2017, have been curtailed by ongoing market developments.

“The board has mutually terminated the negotiations with the parties involved. The company will consider other funding alternatives, to pursue its strategic opportunities,” said Madzinga. A source close to the negotiating parties said it was increasingly becoming difficult to conclude the negotiations in a market bedevilled by currency issues where everyone is looking for real assets.

“Given the loss of value in monetary assets and the continued uncertainty, it becomes difficult to sell real assets when the whole market is moving away from monetary assets,” said the source who requested anonymity.

“The issue of valuation was also another factor as we have a market (ZSE) that is overpriced versus the real value of underlying assets. As much as you can come up with a true intrinsic value, comparisons will always be made with the current market value. Questions will always be raised and the parties involved do not want unnecessary attention.”

The Herald Business understands the assets in question is a 30,03 percent stake in Nicoz Diamond which was to be sold to the National Social Security Authority as part of the latter’s efforts to consolidate its assets under one portfolio. The proceeds from the deal were earmarked to support the ZHL’s new strategic endeavour. The new strategic endeavour saw the group coming up with a five-year strategy that is mainly targeted at trimming non-profitable and non-strategic regional and local operations as well as consolidate operations in markets that are attractive. Proceeds from the disposed investments are to be reinvested in the group.

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