Meikles Limited has issued a circular to its shareholders seeking approval for the disposal of the Harare Meikles Hotel to ASB Hospitality Zimbabwe a group company of Albwardy Investment LLC of Dubai in a deal worth US$20 million.
The Transaction qualifies as a Category 1 classification and requires shareholder approval in a General Meeting scheduled to take place on 13 December 2019 in Harare, Zimbabwe.
Meikles will seek to generate further value in its remaining assets through the re-investment of the proceeds from the Transaction in the agriculture and hospitality segments of the Group's other businesses.
The Meikles Hotel has over the past two decades hit by relatively low occupancy rates and a subsequent lack of investment in refurbishment and back of house services.
John Moxon, Executive Chairman of Meikles, stated that 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," he said.
Laurie Ward, Director of Albwardy Investment's hospitality portfolio, 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," said Ward.
In order for the Hotel to compete with other leading hotels in Southern Africa, foreign currency-denominated long term capital, the scale of which cannot be provided by Meikles is needed.
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.
The disposal of the Meikles Hotel will provide the following benefits to a broad range of stakeholders, including an increase in the Group's profitability, due to lower debt funding requirements from the continual capital expenditure to fund the ongoing refurbishment and upgrade of the Meikles Hotel.
The Transaction has received regulatory approvals from the Zimbabwe Stock Exchange and the Competition and Tariff Commission with only Shareholder and exchange Control approvals required to complete the transaction, both of which will be achieved soon after the completion of the General Meeting.