A top tea producer could be the prodigal son returning to the Zimbabwe Stock Exchange after 14 years, if shareholders in Meikles Limited give the scheme the go-ahead at a meeting on 18 November.

The planned demerger of Meikles, Zimbabwe’s blue chip conglomerate including supermarkets and hotels, and Tanganda Tea which is diversifying into a range of export crops would enable each to focus on raising capital to expand their core businesses. The unbundling has been announced by Company Secretary Tabani Mpofu in repeated cautionary announcements since April.

For up-to-date information on Meikles and other African shares see the superb African Financials website, see listing here.

Miekles shareholders are invited to an Extraordinary General Meeting on 18 November and will be offered 1 Tanganda Tea Share for every 1 Meikles Share they own through a dividend in specie (record date 19 November). Meikles will continue to be listed on both the Zimbabwe Stock Exchange and the London Stock Exchange, according to a recent news story in Zimbabwe Independent and another in Sunday Mail.

Tanganda Tea aims to list shares separately on Zimbabwe Stock Exchange

If they approve, Tanganda Tea is to list its full share capital 261.1m shares of Z$0.01 nominal value on the ZSE by introduction on 2 December, ending a 3-year listings hiatus. Financial Advisor is Imara Corporate Finance and Sponsoring Broker is Invictus Securities.

Tanganda Tea was launched in 1924 – 97 years ago – growing tea from seeds smuggled from India by an Assam tea grower’s wife. It was listed on the ZSE until 2007 when it delisted as part of a merger between its parent and Kingdom Bank and Meikles, which lasted until 2010.

Meikles Chair John Moxon said in discussing the financial results for the year to 31 March 2021 that Meikles had provided additional $20.8m of capital form 2011 to 2021 to support a push to diversify. It now has five estates inter-cropped with tea, coffee, avocados and macadamia nuts. It has invested into avocado processing and 7.5MW of solar power plants. It also has a beverages division and aims to produce more consumer products.

Tea production was 9,188 tonnes to March 2021, up 10% compared to the previous year and rains were good in 2020/21, further boosting production and boosted electricity supplies for irrigation. Tanganda is described as “..now in a solid financial and agricultural position, and therefore that shareholder value would best be served for Tanganda to function as a stand-alone, value enhancing export business”. The pre-listing statement is on the ZSE website.

Meikles keeps its listings on Zimbabwe and London Stock Exchanges

Meikles has financed the investments partly from the $20m sale of Meikles Hotel to Dubai-based Ali Albwardy (Albwardy Investments) in February 2020 after it did not have $30m to invest to make it 5-star.

Meikles is an investment holding company incorporated in 1937 with a primary listing on the ZSE and a secondary listing on the London Stock Exchange. Its retail business includes 56 supermarkets that operate as TM Supermarkets (Private) Limited, co-owned by Meikles Limited (51%) and Pick n Pay Group of South Africa (49%).

Meikles hotels business includes The Victoria Falls Hotel (50% joint operation in Victoria Falls with ZSE-listed African Sun Ltd) and a 35% interest in Mentor Africa (Pty) Limited which owns 100% of Cape Grace Hotel in Cape Town, South Africa.

Thomas Meikles Properties owns properties throughout Zimbabwe leased to related and unrelated parties. Meikles Guard Services (Private) Limited provides manned and electronic security services in Zimbabwe.

The group says it has dropped plans to diversify into mining. It will consolidate the supermarkets, hospitality, properties and security services segments with “a substantial growth in investment in new stores” in the next 3-5 years.

The refurbishment of 115-year-old The Victoria Falls Hotel commenced in June 2021 as part of the preparation for the anticipated rebound in international tourism and travel. Qatar Airways commenced flights to Harare in August 2021 whilst Lufthansa will fly to Victoria Falls three times a week from March 2022.

The Meikles abridged circular is on the ZSE website here

Key dates for restructruring

• 4 March – Directors of Meikles approved the restructure
• 11 October – Zimbabwe Stock Exchange Listing Committee approved the listing, subject to shareholder approval
• 26 October – Tanganda Tea released pre-listing statement, Meikles sent circular to shareholders
• 18 November – Meikles shareholders to vote at resolutions at EGM (also on Zoom)
• 19 November – Dividend record date
• 2 Dec – Tanganda Tea to list by introduction on Zimbabwe Stock Exchange

For a first-look valuation of the 2 shares the 2 companies, see this article in Zimbabwe Independent by Tafara Mtutu, research analyst at Morgan & Co. (tafara@morganzim.com or +263 774 795 854)