Meikles Limited has disposed of its 70 percent shareholding in financial services arm, Meikles Financial Services as part of ongoing restructuring process. The transaction has however courted controversy as the acquisition was made by a consortium, which is reported to have been fronted by Ben Ward.
Ward was initially earmarked for the group’s chief executive position, but the employment contract was cancelled over wide-ranging allegations.
MFS was a partnership between Meikles Limited and Veritran (Private) limited, which controlled 30 percent. MFS launched the MyCash card in 2016 in an arrangement backed by a partnership with POSB savings bank.
Meikles Limited executive chairman John Moxon, confirmed that a transaction was completed but could not give further details.
“We disposed of MFS after we made a decision that we did not really need the asset in the group,” said Mr Moxon.
A well-placed source at MFS who requested anonymity also confirmed that a transaction to buy MFS from Meikles Limited has since been completed.
“The transaction is complete and the new investor has requested to use the MFS server for three months up until they establish their own systems,” said the source.
At the company’s annual general meeting this week, Meikles Limited said the group is working on a restructuring process, which entails securing partnerships for its business units.
He said the restructuring process would not include any offers to minorities.
This comes at the back of the success of the Pick n Pay partnership where the retail group controls 51 percent while the South African retailer controls 49 percent.
Moxon said the restructuring process to be undertaken by the group cannot be equated to unbundling.
“You can envisage that we will introduce partners into the different clusters of the group. So there will be a lot of changes in the next four months, but none of them will be to make an offer to current shareholders.
“This will not be an unbundling process because we think unbundling is not the way to go for the group. We want to preserve our indigenisation status. There is value and room for growth in the group,” he said.
When asked about succession planning, Mr Moxon said there would not be any need for it at the company level, as operational efficiency would have been created by the various investors/partners for the units.
Mr Moxon said the Albwardy Investments offer to buy out Meikles shareholders failed for two major reasons.
“Firstly, we discovered that shareholders didn’t want to sell their shareholding in the first place and secondly because the offer didn’t have a price per share recommendation to go with it.
“To increase value for shareholders and improve operational efficiency, the group is working on several investment plans for the groups units, excluding Pick n Pay, which may include partnership (or outright disposal for the non-core units),” he said.
For the current interim period, Mr Moxon said EBITDA was 50 percent up and all divisions continue to show improved performance.
The interest bill had come off and the trend showed that net profit would be up at the interim stage. The group had been successful in converting short term loans to long term and this had helped improve the balance sheet.
Its ultimate improvement, however, rested on the Government debt, which is due to the group.
Mr Moxon said the debt due to the group (which is above $42 million) had been confirmed and what is outstanding is “the timing and methodology” of how it will be paid.
“Once government debt is completely finalized, then value will be unlocked in the future,” he said.
On the units, Tanganda received an export facility from the Reserve Bank of Zimbabwe.
On the hospitality unit, the group negotiated for a new lease for Victoria Falls Hotel as the current one expires in 2021.
“We negotiated for a new 15 year lease for the Vic Falls Hotel with an option for a further 10 years. This will help us proceed with the next phase of refurbishment.”
Meikles Stores, which carries the M store, Barbours and the MeiklesMega Market, has been successful in reducing overheads but faced challenges in stocking.
Mr Moxon, however, noted that the unit was negotiating for a facility that will enable it to stock well.
“We now look forward to it being released and hopefully Stores will return to break even and then eventually to profitability,” said Moxon.