HARARE, Zimbabwe (News of The South) – Meikles Limited says plans to dispose its main hotel in Harare to Dubai based Albwardy Investment for US$20 million now requires shareholder approval.
This comes as the transaction has received regulatory approvals from the Zimbabwe Stock Exchange (ZSE) and the Competition and Tariff Commission with only shareholder and exchange control approvals required to complete the transaction. However, both of which will be achieved soon after the completion of the general meeting to be held on December 13th, 2019.
Established in 1915, the Meikles Hotel, which has a rich history, is the largest five-star hotel in the capital with 312 guest bedrooms, two restaurants and high-quality leisure facilities.
The Meikles Hotel has over the past two decades been impacted by relatively low occupancy rates and a subsequent lack of investment in refurbishment and back of house services.
The Moxon Group, which is the major shareholder in Meikles Limited, is supportive of the sale. Previously, Meikles Limited chairman, John Moxon said the hotel required about US$30 million to be upgraded to competitive five-star international standards, which the group did not have.
So, the investment will finance the modernisation of the whole operation, as well as general infrastructure improvements, which will restore it to international five-star standards.
Also the disposal of the Meikles Hotel will result in an increase in the group’s bottomline, due to lower debt funding requirements from the continual capital expenditure to fund the ongoing refurbishment and upgrade of the Meikles Hotel.
A strengthened Meikles’ balance sheet, that will allow the group to unlock considerable value to all of Meikles’ shareholders, the transformation of the Meikles Hotel, under the ultimate ownership of Albwardy Investment, into a leading regional hotel and this will secure the long-term viability of the Hotel and its associated businesses, as well as dramatically enhancing and improving Harare’s Central Business District.
The growth of the Meikles Hotel business is poised to attract a far broader clientele of business and leisure customers as part of the Albwardy Investment business model, which being global by nature, partners with the best local and international operators and significant direct foreign investment into Harare and the wider nation of Zimbabwe.
Transaction Proceeds
Meikles will seek to generate further value in its remaining assets through the reinvestment of the proceeds from the transaction in the agriculture and hospitality segments of the group’s other businesses.
“The acquisition of the iconic Meikles Hotel by Albwardy Investment is a win-win for all stakeholders. The group’s financial position is further strengthened and allows Meikles to invest in its broader business portfolio, whilst the entrance of a leading global hotel and hospitality group of the calibre of Albwardy Investment provides security and long-term sustainability for Zimbabwe as a growing regional hub for tourism and business,” stated Moxon.
Founded in the 1970s, Albwardy is a diversified group with operations in over 20 countries, with subsidiaries in sectors such as food distribution, retail, construction, shipyards, hospitality and hotels. On the other hand, Meikles Limited, with operations spanning over a century, has companies in retail, hotels and hospitality as well as the financial sector.
Director of Albwardy Investment’s hospitality portfolio Laurie Ward added: “The Meikles Hotel provides a unique opportunity to invest in Zimbabwe’s leisure and business markets as a first mover. The refurbishment of this strategic asset will bring much needed investment into Harare and profile both the city and country on the international stage.”
Besides the Meikles Hotel, the group is also joint owner of The Victoria Falls Hotel and has a shareholding in the Cape Grace Hotel in South Africa.
Despite the changes in the economic environment, the group performed well in the period ending March 31, 2019. Revenue grew by 51% to RTGS$791.6 million from RTGS$524.9 million in 2017. The diversified group’s after tax profit was up 682% to RTGS$66 million from RTGS$8.2 million previously.
Group earnings before interest, taxation, depreciation and amortization (EBITDA) for continuing operations increased to RTGS$101.5 million from RTGS$40.6 million. Total comprehensive income during the period, rose to RTGS$118.3 million from RTGS$8.2 million – of which RTGS$106.2 million was attributable to the owners of the parent and the remaining balance of RTGS$12.1 million for minority shareholders.
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