One more step in US$20m Meikles Hotel sale

24 Nov, 2019 - 00:11 0 Views
One more step in US$20m Meikles Hotel sale

The Sunday Mail

Fradreck Gorwe

The disposal of Meikles Hotel to ASB Hospitality (Zimbabwe) (Private) Limited is fast approaching its conclusion with a proposal to sell the hospitality concern for a combined US$20 million being tabled.

All that remains for the deal to sail through is regulatory and shareholder approval at an Extraordinary General Meeting earmarked for December 13, 2019.

Proposals for the disposal emanated from the directors’ conclusion that the hotel has no capacity to mobilise the US$30 million required for refurbishment to turn it into a five-star property.

The total amount was required for the substantial modernisation of guest facilities as well as electro -mechanical and plumbing to restore the hotel to international standards.

An abridged circular to shareholders released on November 22, 2019 highlighted that: “It was deemed best for the future development of the hotel to be placed in the hands of skilled international hotel operators with the capacity to undertake the requisite refurbishments of the hotel.”

Details of the disposal transaction indicate that the proposed US$20 million will be broken down into US$3,8 million for the Meikles Hotel business and assets and US$16,2 million for the Meikles Hotel building.

Read the circular in part: “Subject to regulatory and shareholder approval, the board is proposing that the group makes the following disposals to ASB Hospitality (Zimbabwe) (Private) Limited:

(a) The disposal of the hotel business and related hotel assets of Meikles Hotel as a going concern for a total consideration of US$3,8 million; and

(b) The disposal of the immovable property that is the Meikles Hotel building in Harare for a total consideration of US$16,2 million.”

Terms of the transaction with regards to the hotel business and assets as indicated in the circular are that the US$3,8 million plus Value Added Tax (VAT) will be payable in full in United States dollars five days prior to the effective date.

ASB Hospitality, as part of the terms, shall take over all hotel employees (as of the effective date), together with the business and assets in terms of Section 16 of the Labour Act (Chapter 28:11).

Employees as well as the hotel’s liabilities, as of the effective date, shall remain the prerogative of Meikles Hospitality.

For a five-year period with an option to renew, ASB Hospitality shall have use of the name Meikles Hotel, its associated logos as well as intellectual property relating to the hotel business. This will include all the hotel business’ patents , inventions, restaurant naming rights, know-how, trade secrets, confidentiality agreements and confidential information, trademarks, service marks, corporate names, copyrights and applications for registration of any of the foregoing.

Terms regarding the disposal of the Meikles Hotel building shall entail that the US$16 million plus any applicable VAT be payable in United States dollars. A sum of US$2 million will be paid within 15 days from written demand, while the balance of US$14.2 million will be payable within 180 days from the effective date.

Proceeds from the transaction will go a long way in funding the hospitality and agricultural sectors, with a view of enhancing the group’s foreign currency capabilities.

“The proceeds from the disposal of the hotel will be ring-fenced and earmarked for investments that enhance the foreign currency generation capabilities of the group, in particular further investments in hospitality and agriculture,” said management.

Proceeds shall be broken down into US$5 million for the importation of solar equipment, US$3,5 for the importation of fruit processing equipment, US$10 million for the importation of refurbishment materials, upgrades and expansion, US$1,2 million for capital gains tax and re-coupment and finally, US$350 000 for transaction costs.

According to management, neither the shareholding structure of Meikles Limited nor the share capital structure of the entity shall be affected by the transaction.

About Meikles Hotel

Meikles Hotel, which is owned by the Moxon family through Zimbabwe Stock Exchange-listed entity Meikles Limited, is a meeting place for international business executives, dignitaries, leisure travellers and celebrities.

The hotel, which has been in existence for over 100 years, is the brainchild of Thomas Meikles who envisioned a commitment to the “highest possible standard of service and product” — something that has become enshrined in the Meikles culture.

Meikles died on February 8 1939.

The hotel has always been an iconic landmark of the capital city Harare, one which has constantly and gracefully evolved through the colonial era of Rhodesia into modern-day Zimbabwe.

Its position in the heart of the city has allowed its walls to bear witness to many events that have shaped the nation’s past.

The first Parliament of the Colony of Southern Rhodesia met at Meikles Hotel in 1924.

Since then, leading African nationalists, royalty, presidents, distinguished guests and celebrities from various nations have met and stayed there.

But the hotel that Thomas Meikles constructed is set to change hands after the Moxon family, which married into the Meikles family, decided to sell it to Albwardy Investment, which owns ASB Hospitality (Zimbabwe) (Private) Limited.

ASB Hospitality (Zimbabwe) (Private) Limited is owned by Dubai billionaire, Ali Albwardy, who founded his own empire in 1976.

Albwardy Investment has an annual turnover exceeding US$1 billion, and operates in a number of business sectors ranging from food retailing, food distribution, construction, engineering, hospitality and hotel ownership.

Head-quartered in Dubai, the Albwardy portfolio consists of over 30 highly diversified companies and employs over 5 000 multinational and multi-lingual staff, who are supported by a network of global                                           partners.

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