THE Meikles family, the majority shareholder in Meikles Africa Ltd, will consider an offer to sell its shareholding should it be made, a representative of the family said.
Meikles executive chairman John Moxon, a maternal grandchild of the group’s founder Thomas Meikle, says his family will consider an offer to dispose its shareholding to a Dubai-based billionaire, Ali Albwardy.
This comes after Albwardy reportedly made an offer to take over Meikles Ltd, one of the oldest and enduring family businesses in the country. However, Moxon on Wednesday said an offer had not been put to them yet.
“We have not had the offer yet. So we don’t know yet. There is nothing to consider at the moment,” he said.
Moxon told shareholders at the group’s annual general meeting (AGM) in Harare on Wednesday an initial offer to minorities had been made by Albwardy.
He said an offer to all shareholders was expected.
“It depends on the price,” he told shareholders at the AGM.
Eddie Cross, a minority shareholder in the group, took Moxon to task over what he said were violations of the Companies Act and exchange control regulations.
Cross detailed allegations of what he viewed as impropriety on the part of Moxon, a charge the Meikles boss disputed.
Cross questioned why the group’s precious asset, Cape Grace Hotel, located at the V&A waterfront in Cape Town, was sold to Mentor Holdings, a company Moxon is connected to and why no independent valuation of the asset was done.
He added that the offer by Albwardy would prejudice minorities.
In a trade update, Moxon said the group was looking up.
“Earnings before interest, taxes, depreciation and amortisation (Ebitda) more than doubled in the year to March 2017,” he said.
TM supermarket, the largest supermarket chain in the country, had an exceptional year, he said.
“TM Supermarkets outperformed all its competitors in every aspect,” Moxon added.
The group’s agriculture business, Tanganda Estates, had benefitted from good rains downpour in the country, he said.
“Tanganda’s Ebitda is the largest in the country’s history,” Moxon said.
On the hotels side, he said the group’s Victoria Falls hotel had a good year after the first phase of refurbishment.
“The group will embark on phase 2 of the refurbishment for Victoria Falls and we just secured a longer-term lease. With that, the future is brighter,” he said.
Moxon added its flagship Meikles in Harare, a five-star hotel, was charging rates for three-star facility.
“That situation is out of control and will continue like that for the foreseeable future,” he said. Moxon added the group’s net borrowings were reduced after a restructuring of the debts.
A settlement was also reached with government and a payment running several million would be made via treasury bills, Moxon said.
Meikles has assets such as Tanganda, a thriving tea estate in the eastern highlands, the group’s financial services company MFS, and the iconic Victoria Falls Hotel and Meikles hotel in the capital.
The group’s low market value against its underlying value has attracted value investors such as Albwardy.
As at April 21, a market cap of US$32 million and price-to-book ratio of 0,18 and a price-to-earnings ratio of 50, Meikles was grossly undervalued.
The group had total assets amounting to US$282 million in the half year to September 2016 and total liabilities of US$155 million, implying a book value of US$127 million.
The company’s market cap represented only 23% of its book value. In the full year to March 2016 (FY16), Meikles was trading at a discount of 86,7% to its book value.
Meikles owns TM Supermarkets, the largest retail chain in the country in partnership with South Africa’s Pick n Pay, department stores, hotels and a tea producing and manufacturing entity, Tanganda Tea Company.
Its TM and Pick n Pay realised revenues of US$395 million in FY16 with hotels bringing in US$15,8 million, agriculture US$22 million, department stores US$6 million and wholesaling US$2 million, bringing total revenues to US$453 million.