Scheme of arrangement
Meikles Africa Ld
16 October 2007
MEIKLES AFRICA LIMITED
(Incorporated in Zimbabwe in 1937 under company registration number 1/37)
Directors: J. R. T. Moxon, M. Masunda, D. Mills*, D. E. Stephens, C. B. Thorn*,
M. S. Wilson
*Executive Director
Address: 99 Jason Moyo Avenue, Harare, (PO Box 3598), Harare.
Email address: www.meiklesafrica.co.zw
ANNOUNCEMENT TO SHAREHOLDERS OUTLINING THE SALIENT FEATURES OF
THE OFFER BY MEIKLES AFRICA LIMITED FOR THE ACQUISITION OF THE ENTIRE ISSUED
SHARE CAPITAL OF
KINGDOM FINANCIAL HOLDINGS LIMITED, TANGANDA TEA COMPANY LIMITED AND COTTON
PRINTERS (PRIVATE) LIMITED, AND NOTICE OF EXTRAORDINARY GENERAL MEETING ('EGM')
Financial Advisors
IMARA CORPORATE FINANCE ZIMBABWE (PRIVATE) LIMITED
Reporting Accountants to and Auditors of Meikles Sponsoring Brokers
Africa Limited
DELOITTE AND TOUCHE RENAISSANCE SECURITIES (PRIVATE) LIMITED
Members of the Zimbabwe Stock Exchange
Financial Advisors to the Independent directors of Legal Advisors
Meikles Africa Limited
GILL GODLONTON & GERRANS
ERNST AND YOUNG GILL, GODLONTON AND GERRANS
PART 1: CHAIRMAN'S LETTER
1. INTRODUCTION
This summary presents the salient information regarding the proposed merging of
the business interests of Meikles Africa Limited ('Meikles'), Kingdom Financial
Holdings Limited ('Kingdom'), Tanganda Tea Company Limited ('Tanganda') and
Cotton Printers (Private) Limited ('Cotton Printers') ('The Proposed Transaction').
The detailed terms and conditions of the Proposed Transaction are more fully set
out in the Circular to Shareholders ('Circular') to be sent out on or about 16
October 2007. The Circular should be read in its entirety for the full
appreciation of the rationale for and implications of the Transaction, as well
as to determine the action required by Meikles Shareholders with respect to the
Proposed Transaction.
This announcement should accordingly, be read in conjunction with the Circular,
and with reference to the definitions contained therein.
2. PROPOSED TRANSACTION
The Board is proposing to merge the business interests of Meikles Africa,
Kingdom, Tanganda and Cotton Printers through the issue of up to 78 112 138
Meikles Africa Shares to the existing Kingdom, Tanganda and Cotton Printers
Shareholders.
Meikles Africa's authorised share capital is to be increased to give effect to
the Proposed Transaction and ensure adequate provision for any future expansion
and working capital requirements of the Enlarged Meikles Africa group.
The Board proposes the revision of the Articles of Association to accommodate an
increase in the number of directors, the appointment of five additional
Directors to the Meikles Africa Board and the Name Change from 'Meikles Africa
Limited' to 'Kingdom Meikles Africa Limited' ('KMAL') to better reflect the
identity of the enlarged Meikles Africa group, assuming implementation of the
Transaction. Furthermore, a new Kingdom Meikles Africa Staff Share Purchase
Scheme is being proposed to aid the Board in attracting and retaining key
skilled staff members.
Full details of the rationale for, mechanics of and effects of the Proposed
Transaction are set out in paragraphs 4 and 5 of this Announcement.
Authorisation to undertake the Proposed Transaction comprising the offer to the
shareholders of Kingdom, Tanganda and Cotton Printers, the Restructuring, the
appointment of five additional Directors, the adoption of the Staff Share Scheme
and the Name Change, is being sought by the Board from Meikles Africa
Shareholders at the EGM to be held at 9:00 hours on Tuesday 6 November 2007 in
the Mirabelle Room, Meikles Hotel, 3rd Street, Harare.
The purpose of this Document is, accordingly, to furnish Meikles Africa
Shareholders with the requisite statutory and regulatory information relating to
the Proposed Transaction and to detail the action to be taken by each
Shareholder with respect to the various corporate actions proposed herein.
3. CURRENT MEIKLES AFRICA GROUP PROFILE
3.1 Background
North Charterland Exploration Company (1937) Limited ('Northchart') was
incorporated in 1937. It was initially formed to be a mining company and had a
small group of shareholders. In 1961, Lonrho Plc acquired a controlling
interest in Northchart and Northchart was then used as Lonrho's vehicle for
investments in Zimbabwe. It obtained a listing in London in 1943 and was
subsequently listed in Zimbabwe in 1969.
In 1996, Lonrho Plc sold its shareholding in the company as part of its
divestiture programme. At this time, Meikles Consolidated Holdings acquired 30%
of Northchart and took over the management of the company by virtue of Meikles'
senior management becoming directors of the company, with John Moxon becoming
Chairman and Chief Executive.
Later in 1996, Northchart entered into an agreement pursuant to which it
acquired the entire issued share capital of Thomas Meikle Centre and 75% of the
issued share capital of TM Supermarkets from Meikles Consolidated Holdings.
These two were the primary operating businesses of Meikles Consolidated
Holdings. Following this Northchart's name was changed to Meikles Africa
Limited. The 1996 Northchart reverse listing raised US$ 68 million through a
private placement on the London Stock Exchange ('LSE') at which time the LSE
listing became secondary as the Company moved its primary listing to the
Zimbabwe Stock Exchange ('ZSE').
Since listing Meikles Africa has expanded its operations through the purchase of
a 50% interest in the lease Zimbabwe Sun International has to lease the Victoria
Falls Hotel and has purchased 100% of the Cape Grace Hotel in South Africa. In
1999 the Company purchased a 25% shareholding in Kingdom Financial Holdings
Limited. In 2001 Meikles Africa and Kingdom entered into a joint venture to
finance the Meikles Africa Stores Division's credit operations under the name
Meikles Financial Services. Meikles Africa holds 49% of Meikles Financial
Services and Kingdom holds 51%. Meikles Africa increased its shareholding in
Kingdom to 32,9% by following its rights in, and partly underwriting rights
issues held in 2005 and 2006.
3.2 Overview of Meikles Africa's operations
Current group structure of Meikles Africa:
Shown below is the current group structure of Meikles Africa:
To view the group structure paste the following link into your web browser to
download the PDF document related to this announcement:
http://www.rns-pdf.londonstockexchange.com/rns/7395f_-2007-10-16.pdf
3.2.2 Current outlook
Since the latest published information for the year ended 31 March 2007 Meikles
Africa has experienced price control regulations that have affected each of the
divisions of the Company.
On the retail side TM Supermarkets has been unable to source the required
volumes of products to replace those which moved very quickly at the time of the
new price regulations. Bakery operations have been severely affected by
shortage of flour and power outages. Action has been taken to address these
issues and plans are advancing to open three new branches shortly.
Department Stores have also been affected but stock replacement has been more
successful. Sales on credit ceased in July but the replacement cash sales did
not result in customer resistance and sales performance was higher than
anticipated.
For both retail divisions, proposed pricing formulae continue to be recommended
to the authorities. Notwithstanding the difficult market conditions during the
course of the last few months, which affected margins, greater focus on cost
management assisted in both divisions remaining profitable although the cost of
stock replacement will impact heavily on future cashflows.
Price controls and stock availability also affected the Meikles and Victoria
Falls Hotels. However, increases in occupancy and price changes approved by the
Zimbabwe Tourism Authority cushioned the impact, with both hotels remaining
profitable. The Cape Grace is performing at occupancy levels above last year
and current budgets.
There are positive potentials that should arise from the recent Monetary Policy
Statement presented by the Governor of the Reserve Bank. The ability of
manufacturers and suppliers to return to production levels that ensure greater
local stock availability is key as are pricing formulae that maintain viability.
4. RATIONALE FOR AND MECHANICS OF THE PROPOSED TRANSACTION
4.1 RATIONALE FOR THE PROPOSED TRANSACTION
4.1.1 Critical Mass
The Proposed Transaction will lead to enhanced critical mass for the group
leading to improved access to international capital and improved business
efficiencies to the shareholders of Meikles Africa, Kingdom, Tanganda and Cotton
Printers.
4.1.2 Efficient foreign currency utilisation
Within the group, Meikles and Tanganda generate foreign currency and to a lesser
extent so do the foreign subsidiaries of Kingdom. The enlarged group is better
able to channel these foreign currency earnings to the respective subsidiaries
of Kingdom Meikles Africa. The foreign currency generated by the enlarged group
will be more effectively used in projects, which include the fulfilment of
Tanganda's capital investment and expansion plans, Kingdom's regional
development and the multi-million dollar expansion of the Victoria Falls Hotel
and the refashioning of the Meikles Hotel.
4.1.3 Enhanced synergies and efficiencies
The performance of the enlarged group will result in efficiencies, which will
reduce costs, motivate expansion and enhance profits to a level that is higher
than the sum of the individual components to all stakeholders. The enlarged
Group will also utilise its enhanced resource base to create synergies within
the group treasuries and to strengthen customer and supplier relationships.
4.1.4 Enhanced cash generation
The larger group will be cash positive, which will enable former Tanganda
shareholders to enjoy dividends, payment of which has not been possible for some
years. The transaction will lead to efficiencies and cost savings in a number of
areas
4.1.5 Shareholding Structure
Recently the Economic Empowerment Bill passed through both the House of Assembly
and Senate of Zimbabwe. This legislation now awaits Presidential signature.
This legislation provides that a minimum of 51% of all Zimbabwean companies be
held by indigenous Zimbabweans. Assuming fulfillment of the Conditions
Precedent, the Proposed Transaction will result in the resulting Kingdom Meikles
Africa meeting the provisions of this Bill.
Further details of the existing Kingdom, Tanganda and Cotton Printers operations
and financial performance are found in the Circular to Shareholders to be posted
on or about 16 October 2007.
4.2. MECHANICS OF THE PROPOSED TRANSACTION
The Proposed Transaction, on completion, involves the issue of Meikles Africa
Shares to the shareholders of Kingdom, Tanganda and Cotton Printers.
4.2.2 Offer to Kingdom Shareholders
4.2.2.1 Mechanics of the Kingdom Offer
Meikles Africa currently holds 32,9% of the existing Kingdom share capital, and
the offer is therefore for the remaining 67,1% not already held by Meikles
Africa. Pursuant to this, Meikles Africa is offering the shareholders of
Kingdom 17,67 new Meikles Africa shares for every 100 Kingdom shares held, with
a cash alternative of $32 318 per each Kingdom share held. Fractional
entitlements will be rounded up to the nearest whole Meikles Africa share. As a
result of this offer, Kingdom has proposed a Scheme of Arrangement between
itself and its shareholders under Section 191 of the Companies Act. To this
end, and subject to Meikles Africa Shareholders approving the making of the
offer to Kingdom Shareholders, a Scheme Meeting has been called and is scheduled
to take place at 11:00 hours on Tuesday 6 November 2007.
4.2.2.2 Kingdom offer consideration
The offer ratio of 17,67 new Meikles Africa shares for every 100 Kingdom shares
held represents the weighted average ratio of trading prices between the shares
of the two companies as calculated over the 30 and 60 day trading periods up to
the release of the first joint cautionary statement to shareholders on Tuesday
31 July 2007. The cash alternative represents the weighted average market price
over the same period. The Boards of Directors of Meikles Africa, and of Kingdom
have received independent advice from the Independent Financial Advisor, Ernst &
Young. Ernst & Young is of the opinion that the terms and conditions of the
offer are fair and reasonable to Scheme Members. Taking into account the opinion
of the Independent Financial Advisor, the Board of Directors of Kingdom are of
the unanimous opinion that the terms and conditions of the offer are fair and
reasonable to Scheme Members. Accordingly, the directors of Kingdom have
recommended that Kingdom Scheme members vote in favour of the Scheme. Those
directors who are shareholders of Kingdom intend to vote in favour of the Scheme
in respect of the shares in Kingdom owned, directly or indirectly, by them.
4.2.2.3 Kingdom offer voting consideration
Approval to make the offer to Kingdom Shareholders is required by way of
Ordinary Resolution at the Meikles Africa EGM, requiring the approval of 50% of
the Meikles Africa Shareholders present or represented by proxy at the Meikles
Africa EGM. The major shareholders of Meikles, comprising of ACM Investments
(Private) Limited, APWM Investments (Private) Limited, ASH Investments (Private)
Limited, JRTM Investments (Private) Limited and FPS Investments (Private)
Limited collectively represent 55,5% of the shareholding of Meikles Africa.
These parties are considered by the ZSE to be motivators of the Proposed
Transaction, and the ZSE has requested their exclusion from voting. These major
shareholders will therefore not participate in voting on this Resolution in the
Meikles Africa EGM.
Meikles Africa is a 32,9% shareholder in Kingdom and intends voting in favour of
the Kingdom Scheme. Furthermore, major shareholders representing a further 45%
of the issued share capital of Kingdom have indicated that they intend to vote
in favour of the Kingdom Scheme.
4.2.2.4 Termination of the Kingdom listing on the ZSE
The ZSE has, subject to the fulfilment of the Conditions Precedent, as detailed
in Paragraph 8 of this Announcement granted approval for the termination of the
listing of Kingdom shares on the ZSE.
4.2.3 Offer to Tanganda Shareholders
4.2.3.1 Mechanics of the Tanganda Offer
Meikles Africa currently does not hold any shares in Tanganda, and the offer is
therefore for 100% of Tanganda's share capital. Pursuant to this, Meikles
Africa is offering the shareholders in Tanganda 17,20 new Meikles Africa shares
for every 100 Tanganda shares held, with a cash alternative of $31 665 per
Tanganda share held. As a result of this offer, Tanganda has proposed a Scheme
of Arrangement between itself and its shareholders under Section 191 of the
Companies Act. To this end, and subject to Meikles Africa Shareholders
approving the making of the offer to Tanganda Shareholders, a Scheme Meeting has
been called and is scheduled to take place at 10:00 hours on Tuesday 6 November
2007.
4.2.3.2 Tanganda offer consideration
The offer ratio of 17,20 new Meikles Africa shares for every 100 Tanganda shares
held represents the weighted average ratio of trading prices between the shares
of the two companies as calculated over the 30 and 60 day trading period up to
the release of the first joint cautionary statement to shareholders on Tuesday
31 July 2007. The cash alternative represents the weighted average market price
over the same period. ruling market price on the release of the first joint
cautionary statement to shareholders on Tuesday 31 July 2007. The Boards of
Directors of Meikles Africa, and of Tanganda have received independent advice
from the Independent Financial Advisor, Ernst & Young. Ernst & Young is of the
opinion that the terms and conditions of the offer are fair and reasonable to
Scheme Members. Taking into account the opinion of the Independent Financial
Advisor, the board of directors of Tanganda are of the unanimous opinion that
they are fair and reasonable to Scheme Members. Accordingly, the directors of
Tanganda have recommended that Tanganda Scheme members vote in favour of the
Scheme. Those directors, who are shareholders of Tanganda, intend to vote in
favour of the Scheme in respect of the shares in Tanganda owned, directly or
indirectly, by them.
4.2.3.3 Tanganda offer voting consideration
The major shareholders of Meikles Africa, comprising of ACM Investments
(Private) Limited, APWM Investments (Private) Limited, ASH Investments (Private)
Limited, JRTM Investments (Private) Limited and FPS Investments (Private)
Limited collectively represent 55,5% of the shareholding of Meikles Africa and,
directly or indirectly, 58,9% of the shareholding of Tanganda. As such, these
parties are considered to be Related Parties, in terms of the ZSE Listing
Requirements, and are therefore excluded from voting on the Ordinary Resolution
relating to Meikles Africa making the offer to the Tanganda Shareholders at the
Meikles Africa EGM.
The major shareholders of Tanganda, comprising of ACM Investments (Private)
Limited, APWM Investments (Private) Limited, ASH Investments (Private) Limited,
JRTM Investments (Private) Limited and FPS Investments (Private) Limited
collectively representing, directly or indirectly, 58,9% of the shareholding of
Tanganda intend to vote in favour of the Tanganda Scheme.
4.2.3.4 Termination of the Tanganda listing on the ZSE
The ZSE has, subject to the fulfilment of the Conditions Precedent, as detailed
in Paragraph 8 of Announcement, granted approval for the termination of the
listing of Tanganda shares on the ZSE.
4.2.4 Offer to Cotton Printers Shareholders
4.2.4.1 Mechanics of the Cotton Printers Offer
Meikles Africa currently does not directly hold any of the Cotton Printers share
capital, and the offer is therefore for 100% of Cotton Printers' share capital.
Pursuant to this, Meikles Africa is offering the shareholders in Cotton Printers
1 383 330 new Meikles Africa shares for the entire share capital of Cotton
Printers. There is no cash alternative for the offer to Cotton Printers.
4.2.4.2 Cotton Printers offer consideration
The offer ratio of 1 383 330 new Meikles Africa shares for entire share capital
of Cotton Printers represents the ratio of the weighted average market
capitalisation of Meikles Africa over the 30 and 60 day trading period up to the
release of the first joint cautionary statement to shareholders on Tuesday 31
July 2007, to the Net Asset Value of Cotton Printers, adjusted for valuation of
its property as at 30 July 2007. The Board of Directors of Meikles Africa have
received independent advice from the Independent Financial Advisor, Ernst &
Young. Ernst & Young is of the opinion that the terms and conditions of the
offer are fair and reasonable to Meikles Africa Shareholders.
4.2.4.3 Cotton Printers offer voting consideration
The major shareholders of Meikles, comprising of ACM Investments (Private)
Limited, APWM Investments (Private) Limited, ASH Investments (Private) Limited,
JRTM Investments (Private) Limited and FPS Investments (Private) Limited
collectively represent 55,5% of the shareholding of Meikles Africa and directly
hold 100% of the share capital of Cotton Printers. As such, these parties are
considered to be Related Parties, in terms of the ZSE Listing Requirements, and
are therefore excluded from voting on the Ordinary Resolution relating to
Meikles Africa making the offer to the Cotton Printers Shareholders.
The major shareholders of Cotton Printers, comprising of ACM Investments
(Private) Limited, APWM Investments (Private) Limited, ASH Investments (Private)
Limited, JRTM Investments (Private) Limited and FPS Investments (Private)
Limited collectively holding the entire share capital of Cotton Printers intend
to accept the Meikles Africa offer, subject to fulfillment of the Conditions
Precedent, as detailed in Paragraph 8 of this Announcement.
4.3 Adoption Of The Kingdom Meikles Africa Staff Share Purchase Scheme
Shareholders are being asked to approve the placing of 24 000 000 (twenty four
million) unissued ordinary shares in Meikles Africa, being approximately 10% of
the anticipated issued share capital, under the control of the Directors who
shall have the authority to issue the shares in tranches to companies
established for the purpose of staff share purchase schemes at a price per share
to be determined by the weighted average traded price of Kingdom Meikles Africa
shares over the thirty (30) days prior to the date of issue. Shareholders are
also being asked to approve the extension of financial assistance by the Company
to enable Approved Participants to participate in the staff share purchase
schemes.
4.4 Revision Of The Articles Of Association Of Meikles Africa
Shareholders are being asked to approve the revision of the Articles of
Association of Meikles Africa to increase the maximum number of Directors of
Meikles Africa from the existing twelve members, to fifteen members. An
increase in the number of directors is required to better enable reflection of
the shareholding interests following implementation of the Proposed Transaction,
and future expansion of the group.
4.5 Appointment Of Additional Directors Of Meikles Africa
Assuming approval of the Proposed Transaction, and fulfilment of all Conditions
Precedent, Messrs Nigel Chanakira, Rugare Chidembo, Callisto Jokonya, Tawanda
Nyambirai and Mrs Sibusisiwe Bango will be invited to join the Board of Kingdom
Meikles Africa Limited. These additions will increase the number of Board
members from the existing six, to eleven.
4.6 Name Change
As stated earlier in this Circular, it is proposed that the name of the holding
company of the Meikles Africa Group be changed from 'Meikles Africa Limited' to
'Kingdom Meikles Africa Limited'. The necessary resolution for the Name Change
appears in the Notice set out at the end of this Announcement.
Shareholders will be notified by way of a press announcement once the Name
Change has been approved at the EGM, registered with the Registrar of Companies,
and approved by the ZSE.
5. EFFECTS OF THE PROPOSED TRANSACTION
5.1 Share Capital
5.1.1 Share capital before the Proposed Transaction
Set out below is an analysis of the current authorised and issued share capital
of Meikles Africa before the Proposed Transaction:
Share capital details Number of Nominal Value of
Ordinary Shares value of Ordinary
Ordinary Shares
Shares
Current authorised share capital:
Ordinary Shares 200 000 000 $0,0001 $20 000
Current issued and fully paid share capital:
Ordinary Shares 164 189 416 $0,0001 $16 418
Ordinary Shares under the control of Directors in terms of the Meikles 10 216 118 $0,0001 $1 021
Africa staff share purchase scheme
Authorised but unissued Ordinary Shares currently under the control of 25 594 466 $0,0001 $2 559
Shareholders
5.1.2 Changes in share capital pursuant to implementation of the Proposed
Transaction
The implementation of the Proposed Transaction will have the following impact on
Meikles Africa's share capital:
New number of authorised Meikles Africa Shares on increase in authorised share capital 400 000 000
Nominal value of Meikles Africa Shares $0,0001
Total number of Shares to be issued in terms of the Proposed Transaction, comprising: 78 112 138
Number of Shares to be issues to Kingdom Shareholders 56 816 983
Number of Shares to be issued to Tanganda Shareholders 19 911 825
Number of Shares to be issued to Cotton Printers Shareholders 1 383 330
Total number of Shares in issue on implementation of the Proposed Transaction 242 301 554
Number of Ordinary Shares under the control of the Directors in terms of the Kingdom Meikles Africa 24 000 000
Staff Share Purchase Scheme
Number of Meikles Africa Shares under the control of the Directors 133 698 446
5.1.3 Share capital on implementation of the Proposal Transaction
The share capital of Kingdom Meikles Africa on implementation of the Proposed
Transaction will comprise the following:
Share capital details after the Proposed Transaction Number of
Meikles Africa Nominal value of Value of
Shares Meikles Africa Meikles Africa
Shares Shares
Authorised share capital after the Restructuring:
Meikles Africa Shares 400 000 000 $0,0001 $40 000
Issued and fully paid share capital after the Restructuring:
Meikles Africa Shares 242 401 554 $0,0001 $24 230
Number of Meikles Africa Shares allocated to the Kingdom 24 000 000 $0,0001 $2 400
Meikles Africa Staff Share Purchase Scheme
Authorised but unissued Meikles Africa Shares under the 134 698 446 $0,0001 $13 370
control of shareholders
5.2 Shareholders
5.2.1 Current shareholding
With approximately 1 900 Shareholders, Meikles Africa is a fairly broadly held
counter. Its largest Shareholders are ACM Investments (Private) Limited, APWM
Investments (Private) Limited, ASH Investments (Private) Limited, JRTM
Investments (Private) Limited and FPS Investments (Private) Limited who
collectively hold 55,5% of Meikles Africa's issued share capital. Old Mutual
Life Assurance Company of Zimbabwe holds 10,9% of Meikles Africa.
As at the Last Practicable Date, Meikles Africa Shareholders holding more than
5,00% of the issued share capital of the Company comprised the following:
Meikles Africa Shareholder Number of Holding
Ordinary Shares
JRTM Investments (Private) Limited 18 455 737 11,2%
ASH Investments (Private) Limited 18 318 728 11,1%
ACM Investments (Private) Limited, 18 215 506 11,1%
APWM Investments (Private) Limited 18 215 456 11,1%
FPS Investments (Private) Limited 18 215 506 11,1%
Old Mutual Life Assurance 17 819 050 10,9%
108 983 265 66,4%
5.2.2 Foreign shareholding
Of the 164 189 416 Ordinary Shares currently in issue, Non-resident Shareholders
hold 3,0% of the issued ordinary share capital of Meikles Africa.
The London Register accounts for 2,8% of the total shareholding.
5.2.3 Impact of the Proposed Transaction on Meikles Africa's shareholding
Assuming approval of the Proposed Transaction at the EGM, approval by Kingdom
and Tanganda shareholders at their respective Scheme Meetings, and fulfilment of
all Conditions Precedent, existing Meikles Africa Shareholders will be diluted
by the extent of the issue of Meikles Africa shares to existing Kingdom,
Tanganda and Cotton Printers shareholders. Assuming full acceptance of the
offers to Kingdom and Tanganda by way of new Meikles Africa shares, the existing
majority shareholders of Meikles Africa, ACM Investments (Private) Limited, APWM
Investments (Private) Limited, ASH Investments (Private) Limited, JRTM
Investments (Private) Limited and FPS Investments (Private) Limited, will hold
43,0% of Kingdom Meikles Africa Limited.
5.2.3 Shareholding On Implementation Of The Transaction
The following table outlines the anticipated shareholding of Kingdom Meikles
Africa, assuming implementation of the Proposed Transaction, assuming the Scheme
Considerations are settled in full using Meikles Africa Shares.
Shareholder Number of Holding
Ordinary Shares (%)
JRTM Investments 21 076 513 8,7%
Old Mutual Life Assurance 21 022 919 8,7%
ASH Investments 20 929 165 8,6%
FPS Investments 20 859 018 8,6%
ACM Investments 20 839 441 8,6%
APWM Investments 20 836 232 8,6%
Time Cap Investments 7 704 542 3,2%
TS Masiyiwa Holdings 7 624 446 3,1%
Fed Nominees 6 278 361 2,6%
Valleyfield Investments 5 723 277 2,4%
Totals 152 893 914 63,0%
5.3 Financial Effects
5.3.1 Costs of the Proposed Transaction
The costs of the transaction which are to be borne by Meikles Africa, which
relate to specific legal, taxation and financial advisory services, are
estimated at approximately $161 billion, and are expected to be met through
existing resources. A portion or the whole of Imara's fees due with respect to
advisory fees in connection with the Proposed Transaction may be paid by issue
of shares under the Directors control.
5.4 Directors
The Proposed Transaction incorporates both an increase in the maximum number of
Directors in terms of the Articles of Association, and appointment of a further
five Board members in addition to the existing six Board members. These
provisions make allowance for both the broader spread of shareholder interests
and business activities pursuant to the Proposed Transaction, as well as making
provision for future business growth.
5.5 Management
The Proposed Transaction will see Mr Nigel Chanakira assume the position of
Chief Executive Officer of Kingdom Meikles Africa. Kingdom, Tanganda and Cotton
Printers will remain distinct businesses, and the management of these businesses
is expected to remain largely unchanged in the immediate future. Details of key
management are laid out in the full Circular to shareholders.
5.6 Staff Share Purchase Scheme
There are currently 10 216 118 Ordinary Shares available to qualifying employees
in terms of the existing Meikles Africa staff share purchase scheme.
Pursuant to the Proposed Transaction, 24 000 000 Kingdom Meikles Africa Shares
will be placed under the control of the Directors of Kingdom Meikles Africa for
allocation under the Kingdom Meikles Africa Staff Share Purchase Scheme. This
scheme replaces the existing schemes.
5.7 Financial Impact
• Pro-forma historical and inflation adjusted financial information on Kingdom
Meikles Africa for the twelve months ended 31 March 2007 is set out below.
KINGDOM MEIKLES AFRICA LIMITED
PRO-FORMA CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2007
INFLATION ADJUSTED HISTORICAL COST
2007 2007
$m $m
Revenue 1,017,720 396,937
Cost of sales (810,593) (205,339)
Gross profit 207,127 191,598
Interest income - Kingdom 309,777 94,542
Interest expense - Kingdom (104,439) (36,052)
Net interest income 205,338 58,490
Total Gross profit and net interest 412,465 250,088
Dealing profits 86,347 53,044
Other income 52,726 24,768
Employee costs (139,670) (52,295)
Occupancy costs (31,635) (12,609)
Other operating costs (96,093) (18,408)
Impairment loss on loans and advances (2,076) (1,738)
Provision for loss on litigation (8,753)) (1,284
Operating profit before monetary adjustment and 273,311 241,566
exchange gains
Net monetary gain from operating activities (42,384) -
Exchange gains on net current assets 238,077 234,743
Operating profit 469,004 476,309
Investment revenue 15,018 11,125
Finance costs (15,629) (5,636)
Exchange gains on funds earmarked for future 333,290 409,628
investments
Net exchange gains on foreign funds 517,295 608,182
Increase in value of quoted investment 133,042 147,537
Net monetary gain from financing activities 81,210 -
Share of profits of associates 1,092 632
Profit before tax 1,534,322 1,647,777
Income tax expense (268,574) (255,987)
Profit for the year 1,265,748 1,391,790
Attributable to:
Equity holders of the parent 1,257,244 1,382,628
Minority interest 8,504 9,162
1,265,748 1,391,790
Basic earnings per share ($) 4,763 5,237
KINGDOM MEIKLES AFRICA LIMITED
PRO-FORMA CONSOLIDATED BALANCE SHEET
AT 31 MARCH 2007
INFLATION HISTORICAL
ADJUSTED COST
2007 2007
$m $m
Non-current assets
Property, plant and equipment 641,563 504,315
Investment property 8,298 10,370
Biological assets 18,509 169
Investment in associates 14,902 10,890
Other financial assets 711,771 700,433
Goodwill 1,525,301 1,558,997
Other intangible assets 392 -
2,920,736 2,785,174
Current assets
Inventories 169,769 146,870
Trade and other receivables 226,833 220,434
Customers liability for acceptances 16,988 16,988
Cash and cash equivalents 1,537,404 1,537,404
1,950,994 1,921,696
Total assets 4,871,730 4,706,870
Capital and reserves
Issued capital 1,927 -
Share premium 2,547,162 2,246,534
Other non-distributable reserves 168,914 169,861
Retained earnings 1,078,908 1,267,253
Equity attributable to equity holders of the parent 3,796,911 3,683,648
Minority interest 15,708 8,938
Total equity 3,812,619 3,692,586
Non-current liabilities
Borrowings 64,087 64,087
Deferred tax 263,766 218,939
Other financial liabilities 210,292 210,292
538,145 493,318
Current liabilities
Trade and other payables 218,161 218,161
Customer deposits 74,625 74,625
Borrowings 24,038 24,038
Other financial liabilities 204,142 204,142
520,966 520,966
Total liabilities 1,059,111 1,014,284
Total equity and liabilities 4,871,730 4,706,870
6. FUTURE PROSPECTS
6.1 OVERVIEW
Assuming fulfilment of the Conditions Precedent, the Proposed Transaction will
see the enlarged group being one of the largest companies in Zimbabwe. The
conglomerate's business interests will include premier hotels, the largest
supermarket chain in the country, the only department stores in Zimbabwe,
operations in a wide range of financial services and operations in the
agricultural sector and textile sectors.
6.2 LOCAL MARKET
In the local market the enlarged group will attain critical mass to generate
growth in each of the entities and ensure greater efficiency in the utilisation
of resources in the form of group assets and human capital. Each entity will be
in a position to leverage off opportunities created from synergies and assets of
other entities in the group. Kingdom will have enhanced access to markets to
increase its retail deposit base and more closely align branches to Meikles
Retail Division. Tanganda, Meikles Africa Hotels and Cotton Printers generate
foreign currency from their local operations, which will be available for
channeling into their, and other, parts of the group to fund capital projects
and to assist in stock replacement and operational maintenance. The new group
will be in a position to more effectively manage treasury administration and
customer and supplier relationships. In addition, there will be a greater asset
base to provide a foundation for the group to implement expansion plans in each
of the entities. Plans are advancing for major expansion at Victoria Falls
Hotel and the refurbishing of both Zimbabwe hotel operations. Collective
utilisation of the enlarged asset base will provide opportunities to increase
group shareholder value greater than the sum of existing parts.
6.3 REGIONAL GROWTH AND PROSPECTS
Regional growth in the initial stages of the new group will be focused on the
hospitality sector and potential expansion of Kingdom. In the hospitality
sector, plans are advancing for major investment in conservancy and safari
operations leveraging off existing market relationships with Cape Grace Hotel
and Victoria Falls Hotel. The tourist market in South Africa indicates growth,
beyond that merely associated with the 2010 World Cup Football.
Kingdom is looking to extend its operations into the region by using local
experience and skills together with those from its businesses in Botswana and
Malawi.
The greater export drive from Tanganda and Cotton Printers will provide a base
for possible expansion of their businesses into the region.
7. DIVIDENDS
Meikles Africa's historic dividend policy has been 3 to 3,5 times cover of
operating cash flows. However such policy is reviewed from time to time to take
into account various economic and operating factors. Dividends are payable when
the directors of the company deem it fit to do so.
8. CONDITIONS PRECEDENT
The Proposed Transaction is subject to the following approvals:
• Shareholder approval by the requisite majorities at the EGM, on the terms
and conditions and subject to the voting exclusions stated herein, for the
Proposed Transaction, the adoption of the Kingdom Meikles Africa Staff Share
Purchase Scheme, adoption of the revised Articles of Association, the
appointment of five additional Directors to the Board and the Name Change, as
well as for the placing of the balance of the authorised but unissued Meikles
Africa Shares under the Directors' control on implementation of the
Transaction;
• Registration of the Special Resolution relating to the increase in authorised
share capital by the Registrar of Companies pursuant to the Restructuring;
• Approval of the Kingdom Scheme of Arrangement by a majority representing not
less than three-fourths of the votes exercisable by the Kingdom Scheme
Members present and voting either in person or by proxy at the Scheme
Meeting;
• Approval of the Tanganda Scheme of Arrangement by a majority representing
not less than three-fourths of the votes exercisable by the Tanganda Scheme
Members present and voting either in person or by proxy at that Scheme
Meeting;
• Both Schemes being sanctioned by the Court;
• Approval from the Registrar of Banks relating to the revised shareholding
structure with regard to Kingdom.
9. REGULATORY ISSUES
ZIMRA has provided its written approval for the transfer of Tanganda and Cotton
Printers pursuant to the Proposed Transaction to be considered as part of a
scheme of reorganisation for capital gains tax purposes in terms of Section 15
(1)(b) of the Capital Gains Tax Act in terms of a letter dated 14 September
2007. As a result no capital gains tax will be payable by shareholders of
Tanganda or Cotton Printers pursuant to the Proposed Transaction.
In the case of Kingdom, ZIMRA ruled that the transfer of Kingdom shares pursuant
to the Proposed Transaction cannot be considered as part of a scheme of
reorganisation for capital gains tax purposes in terms of Section 15(1)(b) of
the Capital Gains Tax Act. The Company is exploring alternative means through
which it can mitigate the full impact of the potential tax liabilities arising
out of the Proposed Transaction. In the event of capital gains tax arising in
the hands of Kingdom shareholders pursuant to the Proposed Transaction, such
liability will be met by KMAL.
The Registrar of Banks is considering the revised shareholding structure with
regard to Kingdom. The Directors are of the view that the revised shareholding
structure complies with the Registrar of Banks' regulations and will be
approved.
The Competition and Tariff Commission has been notified of the Proposed
Transaction. In terms of a letter dated 9 October the Competition and Tariff
Commission has given its approval for the public notices to be published and for
the Circular to be distributed to shareholders while they are completing
analysis of the application for the merger of the four businesses.
The Exchange Control authorities have approved the application on behalf of
Non-resident Shareholders of Kingdom and Tanganda to receive new Meikles Africa
shares with the equivalent status in terms of an approval dated 7 September
2007.
Meikles Africa, Kingdom, Tanganda and Cotton Printers acknowledge the recent
passing through the Parliament of Zimbabwe of the Economic Empowerment Bill.
Assuming fulfillment of the Conditions Precedent, the Proposed Transaction will
result in the resulting Kingdom Meikles Africa meeting the provisions of this
Bill.
10. MEIKLES AFRICA EGM
In terms of ZSE Listing Requirements, the major shareholders are precluded from
voting on the Resolutions relating to the offers to shareholders of both
Tanganda (Resolution 2) and Cotton Printers (Resolution 3). Furthermore, as
motivators of the merger with Kingdom, the ZSE has requested their exclusion
from voting on Resolution 1, regarding the offer to Kingdom. The Major
Shareholders accordingly do not intend to and will not vote in regard to those
Resolutions.
Subject to the aforementioned voting exclusions relating to the major
shareholders, the support of Meikles Africa Shareholders is being sought for the
Resolutions at the EGM, on the terms and conditions set out herein.
In this regard, approval is being sought specifically for the Proposed
Transaction, the adoption of the Revised Articles, the adoption of the Kingdom
Meikles Africa Staff Share Purchase Scheme, the adoption of the revised Articles
of Association, the appointment of five additional Directors to the Board and
the name change, as well as for the placing of the balance of the authorised but
unissued Meikles Africa Shares under the Directors' control on implementation of
the Transaction.
Set out at the end of this Announcement is the Notice which contains details of
the Resolutions and convenes the EGM, to be held at 9:00 hours on Tuesday 6
November 2007 in the Mirabelle Room, Meikles Hotel, 3rd Street, Harare, at which
time the Resolutions will be proposed for approval by Shareholders, either
present in person or by proxy in terms of Section 129(3) of the Companies Act.
11. STATUTORY INFORMATION IN RESPECT OF THE PROPOSED TRANSACTION
In addition to the details already covered in this Announcement, the statutory
and regulatory information supplied hereunder is provided in accordance with ZSE
Listing Requirements.
11.1 VOTING RIGHTS
All holders of Ordinary Shares entitled to vote will be entitled to attend and
vote at the EGM in accordance with the Company's Existing Articles.
In terms of Section 129(3) of the Companies Act, a member entitled to attend the
EGM may appoint one or more proxies, in the alternative, who need not be a
member(s) of the Company, to attend, speak and vote on his behalf, including
voting on a poll.
11.2 DIRECTORS
Statutory information concerning the Directors of Meikles Africa is set out
hereunder.
11.2.1 Details of Directors
The requisite details pertaining to the current Directors of Meikles Africa are
as follows:
Name of Meikles Africa Age Nationality Physical address Meikles Africa role/position
Director
John Ralph Thomas Moxon 63 Zimbabwean Brandfold, Piers Road, Borrowdale, Non-executive Chairman
Harare
Muchadeyi Masunda 55 Zimbabwean 17 Harare Drive, Chisipite, Harare Non-executive Director
David William Mills 59 Zimbabwean 23 Shottery Road, Greystone Park, Executive Director - Retail
Harare
Dennis Edward Stephens 69 Zimbabwean 252 Fairway Crescent, Borrowdale Non-executive Director
Brooke, Harare
Michael Stuart Wilson 67 British 22 Crescent Grove, London, SW4 7AH, UK Non-executive Director
Cecil Bryan Thorn 56 Zimbabwean 8 Breach Road, Borrowdale, Harare Executive Director -
Finance and Administration
11.2.2 Directors' Interests
11.2.2.1 Interests in Ordinary Shares
As at the Last Practicable Date, the direct and indirect interests of the
Directors of Meikles Africa and their immediate families in Ordinary Shares were
as follows:
Name of Meikles Number of Ordinary Shares held directly Number of Ordinary Shares held indirectly
Africa Director
Last Practicable Date 31 March 2007* Last Practicable Date 31 March 2007*
J.R.T. Moxon 60 674 60 500 2 469 795 2 242 322
M. Masunda 0 0 0 0
D. W. Mills 6 017 6 000 392 620 281 039
D.E. Stephens 20 057 20 000 564 080 449 513
M.S. Wilson 41 900 50 000 0 0
C.B. Thorn 0 0 108 770 1 000
Totals 128 648 136 500 3 535 265 2 973 874
Note:
* Being the date of last publication of Directors' Interests.
11.2.2.2 Other interests
Save as disclosed above, neither the Directors of Meikles Africa nor any member
of their immediate families nor any person acting in concert with Meikles Africa
controls or is interested, beneficially or otherwise, in any Ordinary Shares or
in any securities convertible to rights to subscribe for Ordinary Shares.
11.2.3 Directors' service contracts and remuneration
During the financial period ended 31 March 2007, Directors' fees amounted to an
aggregate amount of $332 million.
Given the appointment of five additional Directors pursuant to implementation of
the Transaction, remuneration will be reviewed from time to time.
11.3 CORPORATE GOVERNANCE
Meikles Africa's Board currently comprises a total of six (6) members, two of
whom are executive Directors.
The Board broadly applies the principles of the Combined Code of Corporate
Governance.
The Board meets regularly, and is responsible for the proper management of the
Meikles Africa Group and setting of the strategic direction of the Group. J. R.
T. Moxon chairs the Board of Directors.
The Board has indicated its full support for the Proposed Transaction.
The Directors' declarations in support of the Proposed Transaction are set out
in 'Opinions, voting recommendations and voting exclusions', being paragraph 15
to this Announcement.
12. DIRECTORS' DECLARATIONS
12.1 STATEMENT OF INDEBTEDNESS
12.1.1 Authorisation
In terms of the Meikles Africa Articles the Directors shall not allow the
borrowings of Meikles Africa to exceed at any time, twice the value of the funds
attributable to the shareholders.
The level of borrowings of Meikles Africa as at 11 October 2007 did not exceed
the limit set in terms of Meikles Africa's Articles.
12.1.2 Solvency, liquidity and working capital statement
The Directors are of the opinion that both the issued share capital and the
working capital of Kingdom Meikles Africa will provide sufficient available
financial resources for Kingdom Meikles Africa's foreseeable working capital
requirements.
12.2 LITIGATION
Neither Meikles Africa nor any of its subsidiaries is involved in any material
litigation, dispute or arbitration proceedings which may have, or have had in
the past 12 months preceding the date of this Document, a significant effect on
the financial position of Meikles Africa, nor is Meikles Africa aware that any
such litigation, dispute or arbitration proceedings are pending or threatened.
12.3 SIGNIFICANT CONTRACTS
Meikles Africa underwrote the Kingdom rights issue in 2006. Apart from this,
Meikles Africa and its subsidiaries have not entered into any significant
contracts, other than in the normal course of business, during the past two
years.
12.4 MATERIAL CHANGES AND COMMISSIONS
Save as discussed in this Document, between 31 March 2007 and the date of this
Document, there have been no material adverse changes in Meikles Africa's
financial position, and no commissions, brokerages, discounts or other special
terms have been granted by Meikles Africa in connection with the issue or sale
of any of its share capital.
13. EXPERTS' AND OTHER CONSENTS
Imara Corporate Finance, Renaissance, Deloitte and Touche, Ernst & Young, GGG,
have given and not withdrawn their consents to the issue of this Document with
the inclusion of their names and reports in the forms and contexts in which they
appear.
14. DOCUMENTS AVAILABLE FOR INSPECTION
The following documents, or copies thereof, will be available for inspection at
the registered office of Meikles Africa, as well as at the offices of Imara
Corporate Finance situated in Harare at 1st Floor, Block 2 Tendeseka Office
Park, Samora Machel Avenue, Eastlea, Harare and in Bulawayo at Farnum House,
Leopold Takawira Street, Bulawayo, during normal business hours, on weekdays,
until Tuesday 6 November 2007:
• Audited financial statements of Meikles Africa for the three financial
years ended 31 March 2007;
• The Accountants' Report on Meikles Africa;
• The Independent Financial Advisor's Report;
• The significant contracts referred to in paragraph 12.3 of this
Announcement; and
• The experts' and other consents referred to in paragraph 13 of this
Announcement.
• Signed undertakings of support for the Proposed Transaction as outlined
in Paragraph 4.2.2.3 and 4.2.3.3 of this Announcement
15. OPINIONS, VOTING RECOMMENDATIONS AND VOTING EXCLUSIONS
Ernst & Young, which was appointed to provide independent advice to Meikles
Africa shareholders has considered the terms and conditions of the Proposed
Transaction and is of the opinion that the terms and conditions thereof are fair
and reasonable in the circumstances and in the best interests of Meikles Africa
and its Shareholders.
The Directors consider the Proposed Transaction to be fair and reasonable in so
far as Meikles Africa Shareholders are concerned and to be in the best interests
of Meikles Africa.
The Directors unanimously recommend that Shareholders vote in favour of the
Resolutions at the EGM to give effect to the Proposed Transaction as the
Directors intend to do in respect of their respective shareholdings.
As stated previously, major shareholders, holding between them 55,5% of the
issued share capital of Meikles Africa, have confirmed their support for the
Proposed Transaction by way of irrevocable undertakings filed with the Company
Secretary. This support is subject to the provisions of ZSE Listing
Requirements, which preclude the Major Shareholders as related parties from
voting on the Resolutions concerning the Proposed Transaction (Resolutions 2 and
3). In the circumstances, the Major Shareholders accordingly do not intend to
and will not vote on these Resolutions.
Yours faithfully
J. R. T. Moxon
Chairman
PART 2: ANCILLARY INFORMATION
1. DELIVERY/COLLECTION OF THE CIRCULAR TO SHAREHOLDERS
Shareholders are advised that although the Circular to Shareholders will be sent
out to all holders of Meikles Ordinary Shares, registered as such at close of
business on 16 October 2007, Shareholders may also contact the transfer
secretaries, Thomas Meikle Centre (Private) Limited, regarding the Circular and
from any of the persons mentioned in the Annexure to this notice.
2. QUERIES
If you have any questions on any aspects of this notice or the Circular, please
contact your stockbroker, accountant, banker, legal practitioner or other
professional advisor, or Sean Gammon at Imara Corporate Finance Zimbabwe
(Private) Limited, Block 2, Tendeseka Office Park, Samora Machel Avenue,
Eastlea, Harare, Zimbabwe; Telephone number +263 4 701320; Fax +263 4 701319;
E-mail: seang@imaracapital.com.
BY ORDER OF THE BOARD
Company Secretary and Registered Office: Transfer Secretaries:
A. Lane Mitchell Thomas Meikle Centre
99 Jason Moyo Avenue 99 Jason Moyo Avenue
(PO Box 3598) (PO Box 3598)
Harare Harare
BY ORDER OF THE BOARD
16 October 2007
Shareholders are advised that the Circular will be posted from 16 October 2007.
In the event that there are any delays in receiving the Circular, Shareholders
may contact the Thomas Meikle Centre or any of the advisors whose names are
given below regarding the Circular at the addresses detailed below.
Shareholders may also collect the Circular from Thomas Meikles Centre and any
one of the following places:
Thomas Meikle Centre Renaissance Securities (Private) Limited
6th Floor 99 Jason Moyo Avenue Members of the Zimbabwe Stock Exchange
99 Jason Moyo Avenue 2nd Floor, Social Security Centre
(PO Box 3598) Parklane
Harare (PO Box 1244)
Harare
Imara Corporate Finance Zimbabwe (Private) Limited Imara Corporate Finance Zimbabwe (Private) Limited
Block 2, Tendeseka Office Park 4 Fanum House
Samora Machel Avenue Cnr Leopold Takawira/J. Tongogara Streets
Eastlea PO Box 524
(PO Box 1475) Bulawayo
Harare
MEIKLES AFRICA LIMITED
(Incorporated in Zimbabwe in 1937 under company registration number 1/37)
('Meikles Africa' or 'Company')
Directors: J. R. T. Moxon, D. Mills*, M. Masunda, D. E. Stephens, C. B. Thorn*,
M. S. Wilson
*Executive Director
Address: 99 Jason Moyo Avenue, (PO Box 3598), Harare.
NOTICE OF EXTRAORDINARY GENERAL MEETING ('EGM')
In terms of the Company's existing Memorandum and Articles of Association ('
Existing Memorandum and Articles'), notice ('Notice') is hereby given that an
EGM of shareholders of Meikles Africa ('Meikles Africa Shareholders') will be
held in the Mirabelle Room, Meikles Hotel, 3rd Street, Harare, at 09:00 hours on
Tuesday 6 November 2007, to consider, and, if deemed fit, to pass, with or
without modification, the following special and ordinary Resolutions:
1. AS AN ORDINARY RESOLUTION - ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL
OF KINGDOM FINANCIAL HOLDINGS LIMITED
Subject to approval of resolution 4 below:
'THAT, the merger of Meikles Africa and Kingdom Financial Holdings Limited ('
Kingdom') to be effected through an offer ('Kingdom Offer') by Meikles Africa to
acquire the balance of the issued share capital of Kingdom not already held in
consideration of the issue of shares by Meikles Africa or purchase for cash upon
the terms and subject to the conditions set out in the Document dated 16 October
2007 be and is hereby approved and the Directors of Meikles Africa (or any duly
authorised committee thereof) be and they are hereby authorised to amend or vary
the terms and conditions of such Kingdom Offer (provided that no such amendment
or variation shall be material in the context of the Kingdom Offer) and to do
all such things as they may consider necessary or desirable to give effect to or
in pursuant to or in connection with the Kingdom Offer.
The major shareholders of Meikles, comprising of ACM Investments (Private)
Limited, APWM Investments (Private) Limited, ASH Investments (Private) Limited,
JRTM Investments (Private) Limited and FPS Investments (Private) Limited
collectively represent 55,5% of the shareholding of Meikles Africa. These
parties are considered by the ZSE to be motivators of the Proposed Transaction,
and the ZSE has requested their exclusion from voting. These major shareholders
will therefore not participate in voting on this Resolution in the Meikles EGM.
2. AS AN ORDINARY RESOLUTION: ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL
OF TANGANDA TEA COMPANY LIMITED
Subject to approval of resolution 4 below:
'THAT, the merger of Meikles Africa and Tanganda Tea Company Limited
('Tanganda') to be effected through an offer ('Tanganda Offer') by Meikles
Africa to acquire the balance of the issued share capital of Tanganda in
consideration of the issue of shares by Meikles Africa or purchase for cash upon
the terms and subject to the conditions set out in the Document dated 16 October
2007 be and is hereby approved and the Directors of Meikles Africa (or any duly
authorised committee thereof) be and they are hereby authorised to amend or vary
the terms and conditions of such Tanganda Offer (provided that no such amendment
or variation shall be material in the context of the Tanganda Offer) and to do
all such things as they may consider necessary or desirable to give effect to or
in pursuant to or in connection with the Tanganda Offer.
The major shareholders of Meikles, comprising of ACM Investments (Private)
Limited, APWM Investments (Private) Limited, ASH Investments (Private) Limited,
JRTM Investments (Private) Limited and FPS Investments (Private) Limited
collectively represent 55,5% of the shareholding of Meikles Africa and, directly
or indirectly, 58,43% of the shareholding of Tanganda. As such, these parties
are considered to be Related Parties, in terms of the ZSE Listing Requirements,
and are therefore excluded from voting on the Ordinary Resolution relating to
Meikles Africa making the offer to the Tanganda Shareholders at the Meikles EGM.
3. AS AN ORDINARY RESOLUTION: ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL
OF COTTON PRINTERS (PRIVATE) LIMITED
Subject to approval of resolution 4 below:
'THAT, the merger of Meikles Africa and Cotton Printers (Private) Limited ('
Cotton Printers') to be effected through an offer ('Cotton Printers Offer') by
Meikles Africa to acquire the balance of the issued share capital of Cotton
Printers in consideration of the issue of shares by Meikles Africa upon the
terms and subject to the conditions set out in the Document dated 16 October
2007 be and is hereby approved and the Directors of Meikles Africa (or any duly
authorised committee thereof) be and they are hereby authorised to amend or vary
the terms and conditions of such Cotton Printers Offer (provided that no such
amendment or variation shall be material in the context of the Cotton Printers
Offer) and to do all such things as they may consider necessary or desirable to
give effect to or in pursuant to or in connection with the Cotton Printers
Offer.
The major shareholders of Meikles, comprising of ACM Investments (Private)
Limited, APWM Investments (Private) Limited, ASH Investments (Private) Limited,
JRTM Investments (Private) Limited and FPS Investments (Private) Limited
collectively represent 55,5% of the shareholding of Meikles Africa and directly
hold 100% of the share capital of Cotton Printers. As such, these parties are
considered to the Related Parties, in terms of the ZSE Listing Requirements, and
are therefore excluded from voting on the Ordinary Resolution relating to
Meikles Africa making the offer to the Cotton Printers Shareholders.
4. AS A SPECIAL RESOLUTION: RESTATEMENT OF THE COMPANY'S SHARE CAPITAL
'THAT, in terms of the Company's Memorandum and Articles, the authorised share
capital of the Company of $20 000.00 (twenty thousand dollars) divided into 200
000 000 (two hundred million) ordinary shares of $0.0001 (one hundredth of a
cent) be and is hereby increased, from 200 000 000 (two hundred million)
ordinary shares of a nominal value of $0,0001 (one hundredth of a cent) per
share ('Ordinary Shares') to 400 000 000 (four hundred million) ordinary shares
of a nominal value of $0,0001 (one hundredth of a cent) per share ('Meikles
Africa Shares').'
5. AS A SPECIAL RESOLUTION: APPROVAL FOR THE KINGDOM MEIKLES AFRICA STAFF
SHARE PURCHASE SCHEME
'THAT, 24 000 000 unissued shares of the Company be placed under the control of
the Directors who shall have the authority to issue the shares to companies
established for the purpose of Staff Share Purchase schemes, on such terms and
conditions as they deem fit, provided that the shares shall be issued t a price
calculated on the basis of the weighted average price of the Company's shares
over the thirty (30) days prior to the date of issue, and that the company
provide financial assistance to the approved participants of such Share
Purchase Scheme by providing loans on terms and conditions approved by the
Company's Non-Executive Directors.
6. AS A SPECIAL RESOLUTION: AMENDMENT OF ARTICLES OF ASSOCIATION
''THAT Article 87 of the Company's Articles of Association be deleted in its
entirety and that the following article (i) be substituted:
'87 (i) Until and otherwise determined from time to time by shareholders in
General Meeting the number of Directors shall be no less than four (4) and no
more than fifteen (15).'
7. AS AN ORDINARY RESOLUTION: APPOINTMENTS OF FIVE ADDITIONAL DIRECTORS OF
MEIKLES AFRICA AS A SINGLE RESOLUTION
Subject to approval of resolutions 1 to 6 above:
'THAT the appointments of five additional Directors to the board of Directors of
the Company be and is hereby approved, which approvals be and are hereby moved
in a single resolution.'
8. AS AN ORDINARY RESOLUTION: APPOINTMENT OF MESSRS NIGEL CHANAKIRA, RUGARE
CHIDEMBO, CALLISTO JOKONYA, TAWANDA NYAMBIRAI AND MRS SIBUSISIWE BANGO AS
DIRECTORS OF MEIKLES AFRICA
Subject to approval of resolution 7 above:
'THAT the appointments of Messrs Nigel Chanakira, Rugare Chidembo, Callisto
Jokonya, Tawanda Nyambirai and Mrs Sibusisiwe Bango as Directors of the Company
be and are hereby approved.'
9. AS A SPECIAL RESOLUTION: NAME CHANGE
Subject to approval of Resolutions 1 to 5 above and registration of Resolution 5
with the Registrar of Companies:
'THAT, with effect from the day after the listing of the new Meikles Africa
Shares on the ZSE, pursuant to completion of the Offers, the name of the Company
be and is hereby changed from 'Meikles Africa Limited' to 'Kingdom Meikles
Africa Limited'.'
10. AS AN ORDINARY RESOLUTION: UNISSUED SHARE CAPITAL
'THAT, although no issue of these shares is contemplated at the present time,
the balance of the authorised but unissued share capital of the Company after
the Proposed Transaction, and establishment of the Kingdom Meikles Staff Share
Purchase Scheme, be and are hereby placed under the control of the Directors for
an indefinite period, to be dealt with in terms of the Company's Articles and
the regulations of the ZSE, provided that no issue will be made which would
effectively transfer the control of the Company without the prior approval of
Kingdom Meikles Africa Shareholders in general meeting.'
BY ORDER OF THE BOARD
Company Secretary and Registered Office: Transfer Secretaries:
A. Lane Mitchell Thomas Meikle Centre
99 Jason Moyo Avenue 99 Jason Moyo Avenue
(PO Box 3598) (PO Box 3598)
Harare Harare
16 October 2007
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