Market sources say Kingdom, which demerged from Meikles Africa this month to end one of the dirtiest corporate fights in the country, last week filed papers with the High Court to reduce its shares as required by the law.
Share capital reduction is a process of decreasing a company’s shareholder equity through share cancellations and share repurchases.
The reduction of capital is done by companies for numerous reasons, including increasing shareholder value and producing a more efficient capital structure.
After a capital reduction, the number of shares in the company will decrease by the reduction amount. In some capital reductions, shareholders will receive a cash payment for shares cancelled, but in other situations, there is minimal impact on shareholders.
“It is a procedure that a company follows when it intends to list on the (stock) market after breaking away from a merger when the two or three companies were listed as one firm before split,” insiders at Kingdom told businessdigest yesterday.
Contacted for comment yesterday, a Kingdom spokesperson said: “Kingdom has requested that the process underway be allowed to be finalised before we can comment on the way forward.”
ZSE CEO Emmanuel Munyukwi told businessdigest yesterday that a company coming from such a background should have the consent of the High Court before formally applying to be re-listed on the stock market.
“All we know is that they have filed papers with the High Court for a reduction of share capital,” Munyukwi said. “We expect a formal re-listing application once this procedure is complete.”
Kingdom and Meikles Africa merged in December 2007 to form Kingdom Meikles Africa Ltd (KMAL).
Kingdom Financial Holdings Ltd founder Nigel Chanakira, who was the company’s chief executive, was then appointed CEO of Kingdom Meikles.
In June 2009, the companies said they planned to separate following a disagreement between Chanakira and KMAL chairman John Moxon, who is the biggest shareholder in Meikles.
What followed was massive squabbling over shareholder value as Chanakira frantically tried to buy back his stake in KFHL.
An Extraordinary General Meeting (EGM) held two weeks ago resolved that the Kingdom founder should regain control of the bank after agreeing to swap his 6% stake in Meikles
for Meikles executive director Moxon’s 43% shares in Kingdom.
Speaking at the EGM, Meikles Africa chairman Farai Rwodzi said: “The entire issue has been resolved, remember it was a long standing dispute that lasted for almost two years, but we have now managed to iron all the issues and Kingdom is no longer part of Meikles Africa Ltd.”
Meikles Africa owns TM Supermarkets, Zimbabwe’s biggest retail chain, and Tanganda Tea Estates, the nation’s biggest producer of the leaf. The demerger was also approved by the Finance ministry and the central bank.