MEIKLES Holdings Limited has set its sights on retiring short term loans, using the US$49,6 million part payment from the Reserve Bank of Zimbabwe (RBZ) to avoid high interest charges.
The company said the US$49,6 million from the central bank would make substantial a contribution to the economy through employment creation and recapitalisation. The money will enable the group to avoid short term expensive loans.
Management said it was satisfied with the progress on securing access to funds and its youth empowerment plan with the Ministry of Youth, Empowerment and Indigenisation have already been approved.
“Government has shown trust in Meikles and we would like to thank them,” said Meikles chairman John Moxon.
“We would like to do more by creating additional employment and continuing with our corporate social responsibility programmes through the Meikles Foundation which are aimed at benefiting the community as we get rid of short-term loans which are expensive.
“Meikles Limited needs to access cheaper and longer term funding. However the key would be to access its deposit with the RBZ as this has no interest implications and allows the group greater flexibility.”
Foreign debt secured
Meikles is currently borrowed to the tune of US$104.6 million comprising of US$64 million locally acquired loans and US$41.3 million foreign obtained – a ratio of 61 percent local and 39 percent foreign.
All of the foreign loans are secured and have longer maturity periods with the first loans due in 2016.
Of the local loans US$43 million mature in the current year with some balances having fallen due or falling due within the next three months while US$8,7 million of the local loans is unsecured.
Moxon added that the group may have substantial excess funds available for expansion, working capital and an appropriate distribution to shareholders on realisation of the RBZ deposit.
The company received Treasury Bills of US$49, 6 million in funds of deposit from the central bank following a series of meetings with the Ministry of Finance and Economic Development and Reserve Bank staff.
The ratification process started in March this year with the first payment being made in June.
A technical committee comprising the Reserve Bank, experts on capital markets and senior Ministry of Finance officials were involved in the painstaking discussions and ratification process that yielded the first tranche of Treasury Bills.Advertisement
The debt arose during Leonard Tsumba’s term of office as the RBZ Governor with the money being used for national needs. It originated in 1998 from deposits when Meikles was listed on both the Zimbabwe and London stock exchanges.
Analysts are of the view that this is the correct message that Zimbabwe must communicate to current and future investors.
However, the group appealed to the Ministry of Finance to expedite and finalise the loan repayment as it had hamstrung the conglomerate.
“Since 2009 the loans obtained have allowed Meikles to expand its operations at Tanganda, creating more than 300 new jobs. The group refurbished its hotels in time for the World Trade Organisation (WTO) conference held successfully at the Victoria Falls.
“We have opened Pick and Pay supermarket branches giving the group access to South Africa’s largest retailer, which comes with more buying power, more employment, lower prices and provide consumers with more choice.
“The group would like to increase its store footprint through opening new branches – thereby creating more employment and opening up more retail space for local manufacturers. However this can only be achieved if the Group has access to capital,” said Moxon.
Meikles recently started operating new ventures including Meikles Security which now provides security to its entities across the country including external clients such as embassies.
The group has also launched a new initiative called Meikles Mega Mart which introduces affordable shopping to the general population of Zimbabwe with the intention of rolling it out in Mutare, Gweru, Masvingo, Hwange and Bulawayo.
Meikles has been operating in Zimbabwe for more than 100 years and as illustrated by their ethos, ‘We are Zimbabwe’, the Group wishes to be in Zimbabwe for the foreseeable future.