Chronicle Editor
Oliver Kazunga, Senior Business Reporter
TANGANDA Tea Company has been granted capital gains tax relief by the Zimbabwe Revenue Authority (Zimra) to facilitate its listing on the Zimbabwe Stock Exchange tentatively set for early next month.
A subsidiary of the diversified group, Meikles Limited, Tanganda is the country’s largest tea producer.
Last month, Meikles Limited announced that plans to unbundle and list Tanganda Tea Company separately on the Zimbabwe Stock Exchange (ZSE) had been deferred from December 9, 2021 pending an agreement with Zimra on capital gains tax.
In a latest update, the diversified group said Zimra has granted Tanganda the capital gains tax waiver in terms of the law.
“Shareholders are advised that Zimra granted the company the capital gains relief provided under section 15 (1) (b) of the capital gains tax act (chapter 23:01) for only 51,39 percent of the issued shares.
“Consequently, there is a residual capital gains tax amount to be paid on the de-merger of Tanganda.
To consummate the de-merger transaction, the directors have authorised the company to pay the residual capital gains tax liability,” it said.
The tax relief Meikles was seeking was part of the conditions for Tanganda’s de-merger and separate listing.
“Process to finalise the assessment of the capital gains tax liability prior to the de-merger and the listing of Tanganda are in progress.
“The deferment of the transaction only affected the implementation and listing dates advised as per the notice dated 16 November 2021.
“With all conditions precedent having been met, the tentative implementation and listing dates are 1 and 3 February 2022, respectively,” said Meikles.
The major reasons behind Tanganda’s de-merger and separate listing on the ZSE is for the tea producer to establish a dedicated stand-alone business attractive to investors and able to pursue business ventures within the value-added diversified agricultural sector in Zimbabwe.
The company also believes the transaction will enable it to raise funding with conditions suitable for the type of business it is in.
Furthermore, it is also believed that the de-merger and separate listing, will help unlock shareholder value.
This is a common reason given by most firms that take similar action.
Over the past few years, companies that have been listed after the de-merger from the parent companies have created handsome returns for their investors.
One such example is the Innscor Group and the companies it de-merged such as Simbisa, Axia and Padenga.
Before they de-merged, the combined Innscor’s market capitalisation was less than that of Delta.
But now, their combined market capitalisation is bigger.
-@KazungaOliver.
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