admingeneral meeting of the company scheduled for June 20 2013, which would also consider other business including adopting 2012 accounts, re-election of directors, auditors’ remuneration and directors’ fees for 2012.
Directors of the Zimbabwe Stock Exchange-listed firm announced in a statement in March this year that the MedTech board had accepted a firm offer from a local company for the purchase of its stake in Zimpharm.
In a statement yesterday, MedTech said part of the business to be transacted at the AGM next month was “to confirm and approve the disposal of Zimbabwe Pharmaceutical (Pvt) Limited”.
Zimbabwe Pharmaceuticals would reportedly be sold for a nominal fee coupled with guarantees to settle the embattled unit’s debts amounting to US$705 744.
Under the deal, MedTech says the buyer would meet certain conditions including writing wdown debt amounting to US$99 321 inherited after the transaction, pay US$207 335 for staff severance and arrears payments and US$399 088 fair value adjustment on loans receivable from the erstwhile subsidiary.
MedTech last year revealed plans to offload the loss-making unit and then proceeded to shut down the associate due to viability constraints. “The possibility that the business could be sold was also announced,” MedTech said. “Since then the board has accepted a firm offer from a local company for the entire stake in Zimbabwe Pharmaceuticals.” The pharmaceutical products distributor said that the offer was a nominal sum, but with certain guarantees against an historic secured debt. But MedTech said certain regulatory and shareholder approvals are required for the transaction to be finalised. Earlier, MedTech sold 49 percent equity of its subsidiary, MedTech Distribution, to Titanium Marketing and Distribution Limited for US$100 000.
Titanium, owned by Mr Afzal Motiwala, the chief executive of MedTech Holdings, injected US$100 000 into the company for the shareholding.
Mr Motiwala was a non-executive director when he bought the company. As part of the deal, Titanium has provided skills, debt finance, new imported product lines and unlocking shareholder value, amounting toUS$800 000. The ZSE-listed firm had last year sold a 40 percent stake of the troubled Bulawayo unit to a Dubai-registered company called Nu Age Cosmetics.
MedTech is owned 34,8 percent by Westminster Holdings, 32 percent by Titanium Marketing and Distributors and 9,9 percent by GPC Trust.
It has been a very tough operating environment for MedTech, a company as much beset by the liquidity crunch as any other in Zimbabwe. In each instance, the company has had to dispose of its units at apparently very low prices, reflecting how the widespread liquidity crisis has haemorrhaged the health products and pharmaceuticals supplier.
In 2010, MedTech was forced to shut down its plastic and textile divisions after succumbing to a US$109 000 loss, largely weighed by lack of capital. The group had plunged to a US$178 000 loss the previous year before funding challenges, closure of the two units and low production at Zimbabwe Pharmaceuticals conspired to affect the group’s 2010 profitability.
While the company says it was forced to sell Zimpharm due to viability constraints, the group seemed to be returning to profitability in the first six months of last year when revenue shot to US$18 million from US$11,2 million in the comparative 2011 period.
Mr Motiwala had told analysts during the firm’s annual general meeting that revenue in the interim had gone up by 40 percent and the manufacturing unit (Zimpharm) accounted for 10 percent of the sales.
Online Reporter