ZSE lifts Meikles suspension

HARARE - The Zimbabwe Stock Exchange (ZSE) yesterday lifted Meikles Limited (Meikles)’s suspension from trading on the local bourse after baulking at the conglomerate's High Court challenge.

In its papers, the diversified group had sought to challenge its suspension on account of section four of the Administrative Justice Act (AJA) and that it was not given a chance to explain itself.

“The consequences of the suspension are far-reaching and have a definite negative impact on the value of the Applicant. The confidence of investors and the perception of the Applicant by the public in general will be negatively affected,” Meikles said.

“As a matter of fact, applicant is presently the subject of negative perception by investors and there is panic and great unease among applicant’s creditors, bankers, members and other stakeholders. The harm being suffered by applicant is very real, material and financially devastating,” it said, adding the damage was “of a continuing nature and is manifestly occasioning irreparable prejudice”.

“The suspension threatens the very existence of the Applicant as a publicly traded entity. As we speak… the Applicant’s shares, which is its very lifeblood, is in a free-fall,” the group’s lawyers Mutamangira & Associates said.

Furthermore, the John Moxon-led company argued that it was a major investor in various industries and that many individuals were also dependent on it, thus any drastic and arbitrary actions would impair its illustrious, and globally-renowned reputation built over a century as well as a direct attack on the economy.

While Chirume had suspended Meikles on the grounds that it had inflated its debt with the Reserve Bank of Zimbabwe (RBZ), the group argues that there was no such issue as it had voluntarily lowered its demand with the Bank.

“The first respondent (ZSE) received a communication from the Reserve

Bank… confirming that the amount owed to the applicant… was $76,1 million. The… respondent avers that there is a material discrepancy between the amount confirmed… and the amount presented as owing by applicant to the public…,” it said,” adding the local bourse believed the “discrepancy was material and price-sensitive” hence its heavy-handed actions.

“…at the time that the financials in question were published, the applicant was still locked in negotiations with the Reserve Bank… and the debt clearly stood in the region of around $90 million. This fact is clearly confirmed by… the Reserve Bank… It is, therefore, unreasonable to aver that the applicant deliberately attempted to mislead investors,” Meikles said.

“The reduction in the amount owed by the RBZ is clearly the result of a compromise in the best interests of the applicant’s business not some sinister scheme,” it said, adding the group’s executives were “best positioned to determine what is in their business’ best interests through stringent and statutory meetings where such decisions are justified”.

“As a matter of financial fact, it was in the best interests… to immediately receive value on a slightly reduced amount as compared to having remained in protracted negotiations without any cash resources being available to further the business… Sight must not be lost of the fact that the dispute… has existed for such a long… time and any further delays would logically further the distance between the applicant, and its money,” the group argued, adding the ZSE’s actions “arbitrarily trampled on the rules of natural justice and brazen violation of its constitutionally entrenched right to administrative justice”.

Meanwhile, Moxon said Meikles had put on hold expansion plans and intentions to list one of its subsidiaries on ZSE, following the suspension.

He added that the group was also contemplating “whether there is any purpose to a listing on the ZSE”.

“The strategy... which was aimed at further expansion in the subsidiaries, the introduction of more investor capital and possibly to even list one subsidiary on the ZSE are on hold for the time being due to present uncertainty,” he said, further stating that there was “now uncertainty as to whether the group’s planned strategy will be feasible, if so, when”.

Moxon said the ZSE action “did not comply with its own rules of engagement”. He argued that the RBZ debt — including accrued interest — was agreed with central bank officials and that they were not engaged or consulted on the issue prior to the suspension.

“In 2013, Meikles, represented by its chairman and… Stanford Moyo, met… (Gideon) Gono, and an official of the bank, Saburi. The purpose of the meeting was to agree on the methodology of calculating the quantum of sums due to Meikles.”

“Agreement was reached. The sum due to Meikles was to be calculated by accruing interest to the capital sum outstanding from time to time at a rate of eight percent per annum compounded back dated to January 1998 when the deposit was made,” he said.

Moxon also said while Meikles had accepted the agreement, it in fact short-changed the diversified group, as the interest accrued was at a lesser rate than the cost of borrowing to the company.

According to results released by Meikles, the group was owed $87,2 million by the RBZ, which has increased to $90,8 million as a result of interest negotiations.

The debt has been increasing since 1998, when it originated. It arose from deposits made to the RBZ following Meikles’ listing on both the local bourse and the London Stock Exchange in 1996 and the raising of funds from a number of substantial investors for the benefit of the company.

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