HomeBusiness DigestZeco sells off assets

Zeco sells off assets

ROLLING stock firm, Zeco Holdings Limited has sold US$4,5 million worth of assets to local steel services firm, Eagletron International, as it turns focus to real estate investment, it has been revealed.

Rolling stock companies, or rolling stock leasing firms, own and maintain railway engines and carriages, which are leased to train operating firms.

Eagletron International trades as Pump & Steel Supplies. According to a circular sent to shareholders this week, Zeco said the sell offs were part of its change of focus to property development.

The property market has been one of the most resilient sectors in Zimbabwe, even as the country’s prolonged economic crisis escalates.

Many firms have entered the market recently, encouraged by this resilience, although many say project funding has been expensive and difficult to access in Zimbabwe.

This week global real estate giant Knight Frank confirmed that funding for construction was increasingly getting unavailable and unaffordable due to high lending costs.

It said many new developments were self-funded, and analysts see the sell offs as a strategy to give Zeco a good start as it shifts focus.

“The company entered into a sale and purchase agreement (the SPA), pursuant to which the company agreed to, amongst other things, dispose of its rolling stock assets for an aggregate cash consideration of US$4 500 000,” Zeco said.

“Directors (including the independent non-executive directors) consider that the terms of the SPA and the disposal are on normal commercial terms and are fair and reasonable and in the interests of the company and the shareholders as a whole,” the firm added.

Zeco said the consideration was determined after arm’s length negotiations between the company and the purchaser with reference to the prevailing market price of properties at nearby locations.

The rolling stock assets had to do with two properties in Bulawayo, one measuring 26 000 square metres together with permanent improvements.

Another piece of land measuring 46 268 square metres was also disposed of, the circular to shareholders indicated.

Zeco said the full purchase consideration was paid.

Eagletron International’s principal business activities are steel retailing and production of various building and mining materials, which include reinforcement steel, roof sheets, brick force and others.

“In order to unlock shareholder value, the board of directors has resolved to change the strategic focus of Zeco Holdings Limited from a rolling stock company to a residential and commercial property investment and development company.” Zeco said.

“Therefore, the directors propose to convene an extraordinary general meeting to be held on August 17 2022 to seek shareholders ratification of the change of strategic focus of Zeco Holdings Limited from a rolling stock company to a residential and commercial property investment and development company.”

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