High Court gives KFHL nod to reduce capital

THE High Court has given the nod to Kingdom Financial Holdings Ltd (KFHL) to reduce its share capital in a move seen as paving way for the banking group’s final demerger from Meikles Ltd after years of corporate infighting.

The development will likely see KFHL relisting on the ZSE next year.
A KFHL spokesperson could not be drawn to comment on the development on Wednesday.
“I think for now, KFHL is not commenting until the whole process is finalised,” said the spokesperson in response to questions from businessdigest.
KFHL earlier told businessdigest that its immediate objective after the demerger was to strengthen the group’s structure before any expansion or listing on the ZSE.
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.
ZSE CEO Emmanuel Munyukwi last month told businessdigest that it was normal for a company coming from such a background to apply for the reduction.
He said KFHL should have the consent of the High Court before formally applying to be relisted on the stock market.
Kingdom and Meikles Africa merged in December 2007 to form Kingdom Meikles Africa Ltd (KMAL).
Kingdom Financial Holdings Ltd founder Nigel Chanakira, who was then KMAL’s CEO, 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, whose family is the largest 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 held in October resolved that Chanakira should regain control of the bank after agreeing to swap his 6% stake in Meikles. 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.

 

Paul Nyakazeya

Top