HARARE – Meikles Limited (Meikles)’ shareholders have approved the provision of a loan to its Employee Share Ownership Trust (Esot) as part of the group’s indigenisation compliance plan.
The funding will enable employees to purchase a ten percent stake – up to 28 million shares worth approximately $7 million – in the listed diversified operation.
This comes as Meikles’ recently said it will be able to fully implement its approved indigenisation empowerment plan when the Reserve Bank of Zimbabwe (RBZ) repays its $66,5 million deposit.
The funds, initially $40,5 million before accruing interest, were a deposit held by the central bank under Meikles’ foreign currency account.
“Now we have sufficient authorised number of shares to be issued to the Esot but to issue those we do rely on receiving funds from our deposit from Reserve Bank,” the group’s chairman John Moxon told shareholders at an extraordinary general meeting yesterday.
“Government, as we are told, is currently working on a repayment plan,” he said, adding that the “ten percent to be transferred to the Esot ensures the group is formally compliant with the country’s indigenisation laws.”
Moxon highlighted that the current prevailing economic constraints were negatively affecting the group’s overall performance.
“The position of the country’s economy is quite difficult. Our performance for first quarter which starts in April was fine but in the subsequent quarter cash shortages have affected us. I don’t want to speculate but the economy is not that robust to achieve much,” he said.
In 2011, Meikles’ shareholders approved that 24 million unissued shares be placed under the control of directors who shall have the authority to issue them to the Trust.
That would be done at a subscription price calculated on the basis of the weighted average Meikles shares over 30 days prior to the issue.
Last month, the group’s company secretary Andrew Lane-Mitchell noted that the assistance to Esot would only be extended when the company’s funds on deposit with the RBZ are repaid.
“The 24 million unissued shares constitutes 8, 91 percent of the issued share capital of the company. The ministry of Youth Development, Indigenisation and Empowerment have approved the company’s provisional indigenisation plan on the condition that 10 percent of the issued capital be issued to the Trust,” said Lane-Mitchell.
He added that to meet the condition, a further four million need to be issued to the Trust in addition to the shares already authorised to be issued.
“So, in total 19,581,490 shares will be placed under the control of directors.
“This total together with the 8,418, 510 shares already issued to the Trust will constitute 10 percent of the company’s issued share capital,” said Lane-Mitchell.
In August this year, the company said negotiations to recover the funds owed by the RBZ were nearing conclusion as the group sought to improve profitability.
“Progress has been made in getting better terms on the funds.
“The discussions are nearing conclusion and will result in a higher interest being accrued on the deposit, with a retrospective implication,” said the company in a statement.