BY FIDELITY MHLANGA
Meikles Limited is set to dispose of its iconic Meikles Hotel in capital Harare for US$20 million to Dubai-based Albwardy Investments, NewsDay has established.
The deal, which has been on the cards for years and suffered several setbacks, will unfold in two parts.
Firstly, Albwardy Investments, through its wholly controlled local special purpose vehicle, Choicebrands, which was incorporated in Zimbabwe last year will take over the hotel land and buildings.
The second phase of the transaction will see Choicebrands acquiring the rights to operate the brand name and take over all hotel employees.
Meikles will still retain its interests in the Victoria Falls Hotel, and shareholding in Mentor Africa Limited, a company which owns The Cape Grace Hotel in South Africa.
“The (Meikles) Hotel is in a pretty bad shape and requires a whole lot of money to upgrade and return to world-class standards, but the group just does not have that kind of money for now. They are already sitting on a huge pile of debt, so borrowing more funds will not be an option. So it makes sense for them to sell it off and invest the proceeds in their other operations,” said a source with intimate knowledge of the transaction.
As at March 2018, the Meikles Group had US$174 million in total liabilities, with borrowings amounting to US$73 million.
An enquiry with the Competition and Tariffs Commission confirmed that the watchdog was reviewing the multi-million-dollar transaction.
“Yes, we are handling the transaction involving Meikles Hotel,” said director Ellen Ruparanganda.
The deal awaits further shareholder approval, with an extraordinary meeting scheduled for this month in accordance with the Zimbabwe Stock Exchange rules.
Meikles has since published a cautionary statement to that effect.
“Further to the cautionary statement published in the Press on February 22, 2019 and subsequent updates on March 20, 2019, April 12, 2019 and May 2, 2019, the directors of Meikles Limited wish to advise shareholders that discussion to sell certain of its hospitality assets are on-going. The company will be seeking the approval of its shareholders for the proposed disposal at an extraordinary general meeting to be convened at a future date,” Meikles said in a statement last month.
Contacted for comment, Meikles company secretary Thabani Mpofu said he could not comment beyond the cautionary statement.
Albwardy Investments already has presence in over 20 countries where it operates in a number of business sectors, ranging from retail, food distribution, construction, engineering, and hospitality.
The company also controls Four Seasons Hotel in Johannesburg, Four Seasons Resort Seychelles, Four Seasons Safari Lodge in Serengeti, Four Seasons Hotel in Buenos Aires, Four Seasons Private Residences Seychelles, Park Hyatt in Zanzibar, Hyatt Regency Dar Es Salaam, Hyatt Regency in Addis Ababa, Melia in Zanzibar, Melia in Serengeti and Melia in Arusha.