Meikles, Kingdom demerger approved

By Martin Kadzere

GOVERNMENT last week approved the demerger of Kingdom Financial Holdings Ltd from Meikles Limited. The process now awaits sanctioning of the dividend in specie to foreign shareholders by the Reserve Bank of Zimbabwe.

The conditions precedent to the demerger have been partially fulfilled with the major outstanding issue being the approval by the Ministry of Indigenisation and Empowerment.

Meikles shareholders resolved last October to demerge KFHL from the group through a dividend in specie to shareholders.

Meikles chairman Mr Farai Rwodzi confirmed the approval yesterday: “I can confirm that we have received the approval from the Government and we are hoping to be through with the demerger process very soon.”

The rationale of the demerger was to establish KFHL as a stand-alone business that is attractive to investors and enable it to pursue business ventures within the financial services sector.

Upon full implementation of the demerger process, Meikles shareholders will be entitled, in terms of the distribution ratio, to receive two shares in KFHL for every one existing share held at the record date of October 29 last year.

Once the process is complete, the Meikles group will maintain its interests in the retail, hotel and agro-processing businesses and will remain listed on the stock market.

On the other hand, the proposed transaction will enable Meikles shareholders to own a direct shareholding in KFHL, a banking and financial services business, comprised of Kingdom Stockbrokers, Kingdom Asset Management, Micro-King Finance and Kingdom Bank Limited.

KFHL will list separately on the ZSE, soon after the de-merger. KFHL merged with Meikles Africa in 2008 to become Kingdom Meikles Africa Ltd in a deal that raised the prospects of the financial concern listing on the Wall Street’s elite bourse, the New York Stock Exchange.

The new conglomerate included TM supermarkets, Meikles Hotel, Meikles Stores, Tanganda, Cotton Printers and KFHL subsidiaries.

But what had promised to be a new era for KMAL turned into a “nightmare” as shareholder disputes emerged leading to an acrimonious divorce between the two merged entities.