Zimbabwe Stock Exchange (ZSE)- listed conglomerate, Meikles Africa Limited, has started the process of delisting from the domestic bourse after giving the country’s equities market a vote of no confidence two years ago.
Meikles’ company secretary, Thabani Mpofu, yesterday issued a statement indicating that the company was “engaged in discussions on a transaction that may have material impact on the value of the company’s shares”.
He disclosed that the transaction related to a “possible offer to minorities” that could precipitate delisting from the ZSE.
Apparently, the decision by Meikles follows a fall-out between the company and the bourse in February 2015 after the ZSE suspended Meikles on allegations of overstating a debt it was owed by the Reserve Bank of Zimbabwe (RBZ) with the possible intention of manipulating its share price.
Meikles had reported that it was owed about US$90 million by the central bank for transactions related to the group’s dual listing on the ZSE and the London Stock Exchange.
The group said it hoped to get its money from the central bank to fund its expansion programmes and comply with indigenisation law.
But the ZSE took punitive action against the company, alleging that the Securities and Exchange Commission of Zimbabwe had received written submission from the RBZ on the asset’s carrying value and availed this to the ZSE, which believed that the information was “material and price-sensitive”.
“On this basis, the ZSE deems it important to temporarily suspend trading whilst clarity is being sought in the interest of maintaining market integrity through promotion of equal dissemination of information. The ZSE has therefore, pursuant to Paragraph 1,4 in Section 1 of the ZSE Listings Requirements, temporarily suspended trading in Meikles Limited’s shares,” the ZSE had said in its statement on the suspension.
Meikles had reacted angrily to the suspension and threatened to pullout from the bourse.
It filed a lawsuit against both the ZSE and its chief executive officer, Alban Chirume, in his personal capacity, claiming delictual damages to the tune of US$50 million from the bourse for patrimonial loss plus interest and costs of the suit.
Meikles argued that the ZSE had acted outside the law and did not accord the company the right to be heard in breach of Section 3 of the Administrative Justice Act.
It alleged that its reputation had suffered, and this therefore meant that the shares of the company were equally going to suffer a loss.
“The price at which a share trades is directly linked to how the company performs. The question of quantum is an actuarial issue,” said Meikles, arguing that its claims were “for purely economic loss”.
It appears the ZSE had also not followed proper procedures when it suspended Meikles from the bourse.
The ZSE had immediately lifted the Meikles suspension, but gave no reasons.
But it had filed its intention to defend the lawsuit, and had in fact sought exception on behalf of both the ZSE and Chirume and a special plea in bar in respect of Chirume.
Should Meikles successfully delist from the ZSE, this will leave the reputation of the domestic bourse, currently under pressure for failing to act on investor complaints in time, battered.
Meikles started operating in Zimbabwe, then Rhodesia, in 1892, owned by three brothers John Meikle (1868-1949); Stewart Meikle and Thomas Meikle (1862 – 1939), who had migrated from Scotland to South Africa, before venturing into business north of the Limpopo River.
Over the years, the company has grown into a conglomerate, which listed on the ZSE in 1996.
The company owns the Meikles Hotel, Cape Grace Hotel in Cape Town, South Africa and The Victoria Falls Hotel in Victoria Falls in a joint venture arrangement.
In retail, it owns department stores in Zimbabwe operating as Barbours.
It has cross ownership in Tanganda Tea Company and the Cotton Printers and also owns the TM Supermarket chain.Financial Gazette