Group chairman John Moxon said his board was confident that the strategic investment in Mentor would produce significant high growth opportunities, similar to those that the company derived from its previous investments in Rebhold/Mvelaphanda.
“Mentors deal flow pipeline is strong with good upside potential. The merger of these entities will enable the group to enhance the value of its regional assets,” he said.
Under the merger deal, Meikles will take up shareholding in Mentor and merge the flagship Cape Grace hotel into Mentor whilst the funds initially held by Mentor on behalf of the Cape Grace would be converted into equity in Mentor.
The company said the respective assets were presently being valued, adding once this process was complete the transaction would take effect from 1 April 2012. Post the transaction, Meikles Group will own approximately 35% of Mentor Holdings.
Meikles FD Onias Makamba told businessdigest that the board was confident in the company’s investment in Mentor. “The Mentor shareholders were once involved in Rebhold/Mvelaphanda in which the Meikles Group invested. In 1996 Meikles invested R5,2 million in Rebhold/Mvelaphanda and realised R60 million during the period of investment that lasted until 2007. It is the same skills that the Group has teamed up with and hence the Board being confident that the new investment will yield significant returns,” he said.
According to Makamba, major opportunities are at advanced stages of negotiation and planning. Makamba also disclosed that Meikles would over the next two years invest more than US$200 million across its operations.
“On 16 January 2012, shareholders were advised that Gondor Capital Limited, which is a shareholder entity had intentions of raising US$200 million for investment in Meikles and other projects. That’s in the next 24 months, this amount is the targeted investment and includes the investment into our existing operations and the new $150 million project referred to in our Chairman’s statement,” he said.
Commenting on the group’s financial performance Makamba was bullish, saying some of the exceptional expenses particularly related to the legal and professional fees incurred at the Corporate office following de-specification of the Chairman and compliance with indigenisation . He also told businessdigest that personnel at the Corporate office had been rationalised.
“For example, we have not replaced the CEO and two other executives who left the Corporate office during the course of the financial year. Other services which were centralised have since been decentralised. Rationalisation is an ongoing process across all our businesses as we seek to streamline our operations”, he said.
Makamba said the group had a good second half of the year with a profit of US$1,6 million, having made a loss of US$5 million in the first half. In addition, the second half earnings also included the majority of the exceptional expenses reported in the financials amounting to US$6,3 million. The increase in turnover of 30% was achieved with minimal investment in key areas of the group’s operations.
“We have now received the US$13 million from Pick n Pay, resulting in increased investment in TM Supermarkets. This is being utilised in the refurbishment of our stores. Our hotels are being refurbished,” Makamba said.
“The plantation development in Tanganda is proceeding according to plan. We have finalised the disposal of the Cape Grace and the investment into Mentor which is a growth asset. All these initiatives will support the recovery of the Group going forward,” he added.
Mentor Holdings is a South African- domiciled investment shell company that has a growing and diversified portfolio of investments. One of these is Wings Inflight Services, which is a joint venture with Dnata, which is a member of the Emirates Group.
This company is the world’s fourth largest provider of inflight catering and allied services to international airlines to and from South Africa. The company has state-of-the art catering facilities located in Johannesburg and Cape Town. Its major customers include Emirates Airline, British Airways International, Singapore Airlines and Thai Airways.
Mentor has also established Energy Efficient Retrofit Lighting Products, a company whose core mandate is the provision of energy efficient , low wattage, high output, industrial, retail and commercial electronic fittings. The service results in significant savings in the energy bills and is environmentally-friendly. The company has negotiated significant contracts for the supply and installation of new light fittings to a number of sites on behalf of large property owners in South Africa.