Meikles given 7-day ultimatum

HARARE - The Zimbabwe Stock Exchange (ZSE) has given Meikles Limited (Meikles) a seven-day ultimatum to “respond to issues” concerning overstatement of its $90 million debt owed by the central bank.

This comes as the diversified group’s week-long suspension from the bourse was lifted on Monday after a successful High Court challenge.

Alban Chirume, the ZSE’s chief executive, said they were giving Meikles a chance to address the matter, but did not disclose the planned action if the group failed to meet the deadline.

“We have given them until 16:30 hours on March 2, 2015 to respond to the specific issues,” he said in a statement released on Monday.

“The ZSE has written to Meikles Limited in relation to matters that are of concern to the ZSE primarily related to the carrying amount of the balances with the Reserve Bank of Zimbabwe (RBZ) as well as the possible financial impact and certain matters that have recently come in the public domain pertaining to matters that may have a material impact on the soundness and accuracy of the 2014 financial statements,” Chirume said.

Upon lifting the suspension, Chirume — a former chief executive of capital markets regulator, the Securities Commission of Zimbabwe — said the “decision to reverse the temporary suspension was necessitated by the fact that Meikles was not given an  opportunity to make representations in terms of the ZSE Listings Requirements prior to the temporary suspension…”

According to him, the temporary suspension and its lifting were approved by the Securities and

Exchange Commission of Zimbabwe pursuant to Section 64 of the Securities and Exchange Act (Cap24.25).

Earlier, he said Meikles’ suspension was necessitated by the carrying amount of the asset placed with the RBZ as disclosed in the company’s audited financial statements for the year ended March 31, 2014.

Following the suspension, Meikles executive chairman John Moxon said the group was rethinking on its continued listing on the bourse, adding that the group had put on hold expansion plans and intentions to list one of its subsidiaries on the local bourse.

“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”.

According to the Meikles boss, the ZSE action did not comply with the bourse’s rules of engagement.

He argued 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.

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.

“The Reserve Bank of Zimbabwe has been a delinquent debtor of Meikles for a while, and the way the suspension of the group was handled violated the stock exchange’s way of doing business,” Moxon also said.

Results released by Meikles indicate the group was owed $87,2 million by the RBZ, which originated in 1998. The amount however increased to $90,8 million due to interest negotiations over the years.

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