Meikles, Kingdom Marriage on the Rocks

IT was expected to be a marriage made in heaven.

The prosperity, survival and expansion of most companies on the Zimbabwe Stock Exchange would depend on the overall strength and structure of Kingdom Meikles Africa Ltd (KMAL) balance sheet and cash flow.

The de-merger of KMAL at an extraordinary general meeting to be held in the next 21 days, is expected to resolve 10 months’ dispute among shareholders and improve market perception of both KMAL and Kingdom Financial Holdings (KFH).

The EGM, according to insiders, will expose “new relations between the companies’ major investors, directors and shareholders as a lot of developments had been happening behind the scenes since February this year”.

Econet, the single largest institutional investor in KMAL, yesterday said the de-merger was expected to resolve the existing shareholder disputes and improve the market perception of both KMAL and Kingdom Financial Holdings.

“It is envisaged that improved market perception will unlock shareholder value expected through improved share price performance of the de-merged entities relative to the consolidated entity,” said Econet.

“It is also hoped that the specification on the Meikles family, on their investment vehicles and on TM Supermarkets will be lifted. Such a positive development is expected to help improve the image of the country and make the group more attractive to foreign investors,” Econet said.

The effect of the de-merger is that KMAL shareholders will become shareholders in Kingdom.

KMAL shares shall be reduced by 234 046 621 pursuant to the proposed share buy back.

The de-merger will also result in changes in the appointment and composition of board of directors of Kingdom and KMAL.

At the EGM, KMAL chief executive Nigel Chanakira, directors Callisto Jokonya, Susan Bango, Cecil Thorn and Chairman John Moxon will resign from the KMAL board.

Moxon, through associate companies, is KMAL’s biggest shareholder with a 42,9% stake in the group.

Moxon-linked companies in KMAL include ACM Investments, JRT M Investments, ASH Investments, FPS Investments and APWM Investments.

Irreconcilable business differences and personal interests between Moxon and Chanakira have forced the de-merger.

Chanakira has assured the market that Kingdom Bank would still be able to meet the minimum capital requirements set by the Reserve Bank after the de-merger.

Meikles Africa and Kingdom merged in December 2007.

This was after shareholders of Meikles Africa on November 15 approved the acquisition of all the issued shares of Kingdom Financial Holdings, Tanganda Tea Company and Cotton Printers through the issue of 78 112 138 Meikles ordinary shares to existing shareholders in Kingdom, Tanganda and Cotton Printers under a scheme of arrangement sanctioned and confirmed by the High Court of Zimbabwe.

BY PAUL NYAKAZEYA