HomeNewsWe may pull out of KML — Old Mutual

We may pull out of KML — Old Mutual

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Old Mutual Zimbabwe says it may pull out of Kingdom Meikles Limited (KML) or tell warring parties “enough is enough”, if its associate’s long-drawn-out ownership dispute continues to batter investment income for its policyholders.

CEO Luke Ngwerume said this in an exclusive interview with NewsDay in response to a question, which elicited the position of the country’s largest savings fund on KML’s messy corporate divorce.

“There will come a time when we’ll say ‘you’re messing us up, we’ve had enough (of the unending ownership wrangle)’. Alternatively we can pull out our investment,” Ngwerume said.

“The situation will tell us what to do.”

Old Mutual controls a minority 10% of KML and is one of the shareholders who voted to separate Kingdom Financial Holdings Limited (KFHL) from Meikles Limited in June last year, just one and a half years after the two companies merged into one of the country’s most diversified public entities.

However, the demerger has dragged largely because of an unending dispute over the post-demerger shareholding structure of KML and associated demerger transactions that subsequently erupted between majority shareholder John Moxon and KFHL founder Nigel Chanakira.

Ngwerume said Old Mutual would take a definite position on the corporate divorce once it gets an “understanding of what is going on”, but admitted the assets underlying the investment were too “good” to ignore.

“Look at the fundamental assets. They are good assets and this makes it a strong investment case,” Ngwerume said.

“But the performance of the investment has been affected by the ownership dispute and the impact on the share price has been adversely negative.

“Our focus for the time being is to get an understanding of what is going on. We need to understand what is going on and I don’t think a lot of people, including you, understand what is going on.
Once we have adequate information, we’ll obviously make our own view.”

Since the ownership wrangle broke out in 2008, the interests of minorities — who jointly hold the majority stake of KML — have knuckled under those of Moxon and Chanakira, who control 42,9% plus 2,58%, respectively.

After what looked like the final truce between the two belligerents in December last year when they agreed a demerger deal, the dispute reincarnated last month when Meikles Limited rejected Chanakira’s payment plan for his bid of Moxon’s equity in KFHL.

Meikles Limited announced to shareholders it would proceed with the demerger, but on amended conditions.

Under the new terms, Meikles Limited would retain 42,9% of KFHL, 75% of TM Supermarkets and 100% of Tanganda Tea Company, Thomas Meikles Centre, which holds the hotels division and department stores, and Cotton Printers, now in liquidation.

But government has intervened, urging Moxon-controlled Meikles Limited and Chanakira to agree a “win-win” demerger deal.

The demerger has in the past been riddled with specifications, threats of arrests, court interventions and forced EGM dispersal orders.

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