Meikles Africa Ld - Acquisition of Property
15 August 1998 - 3:22AM
UK Regulatory
RNS No 7083p
MEIKLES AFRICA PLC
14th August 1998
Circular to Shareholders
The Victoria Falls Hotel
Meikles Africa has acquired a half share in the business of the
Victoria Falls Hotel and has established a partnership ("the
Partnership") with Zimbabwe Sun Limited to operate the hotel
jointly. The price paid for this acquisition was Z$347.5 million
and the transaction is effective from 1 April 1998.
The owner of the hotel property has agreed to the assignment of
the current lease to the Partnership. The lease, which expires on
31 March 2008, affords the lessee the right of first refusal in
the event of the sale of the property. The owner wishes to sell
the property and the Partnership has indicated to the owner its
interest in acquiring the property.
The establishment of a hotel operation at Victoria Falls has been
an important component of the company's drive to achieve
sustainable growth in medium term operating profits. This
transaction immediately achieves that objective. A key aspect of
the transaction has been to acquire predominantly hard currency
earnings. Inevitably in the high interest rate environment, this
acquisition, which has been financed out of local borrowings, will
have a negative short term impact on earnings. However, the
directors anticipate that on an after tax basis, this reduction in
earnings will be more than offset by the substantial gains from
the company's hard currency cash investment, which remains intact.
The impact of the transaction on earnings per share in the current
year and on net asset value is not material. In the years to
come, it is expected that the Victoria Falls Hotel will increase
the company's earnings per share significantly.
The existing infrastructure of the hotel permits an increase in
room capacity. The intention is to implement this increase which
will further enhance the hotel's profitability. Efforts are
already underway to attain an ISO 9002 quality certification and
membership of the Leading Hotels of the World.
The directors of Meikles Africa Limited:
* are satisfied that the acquisition of an individual half
share of the operations of the Victoria Falls Hotel justifies
the consideration paid
* each confirm that they have no direct of indirect beneficial
interest in the transaction beyond their remuneration and
their shareholdings in the company,
details of which were published in the 1998 Annual Report
* confirm that the company has sufficient working capital to
meet its requirements for the foreseeable future
* confirm that there has been no material adverse change in the
financial and trading position of the company since the last
financial year end on 31 March 1998
* accept full responsibility for the information contained in
this circular and certify that to the best of their knowledge
and belief there are no other facts whose inclusion would
have rendered this circular misleading and that they have
taken appropriate steps to ascertain the relevant facts
By order of the Board of 14 August 1998
Meikles Africa Limited
Enquiries:
Meikles Africa Limited Tel: + 263 4 730 611
Andrew Lane-Mitchell, Company Secretary
College Hill Tel: + 44 171 457 2020
Nicholas Williams
END
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