UK firm offloads Zimplow stake
Zimbabwe - Corporate - 03-09-2010

UK firm Amalgamated Metal Corporation subsidiary Metal and General Limited offloaded its 28.6% stake in listed agricultural equipment manufacturer Zimplow as it restructures its portfolio. Until the transaction on 8 March 2009, Metal and General Limited was the largest shareholder in the company, followed by CTB Investments with 19.1% stake, Datvest Nominees with 8.03% equity and Yumiko Investments holding 6.39%. LES nominees now have the majority shareholding with 29.3% as of end of the week ending 7 March 2010. The 106m shares were sold at a bargain price of USD 0.03 per share, driving the value of stocks traded on Zimbabwe Stock Exchange on 8 March 2010 to USD 3m. Zimplow has 327m shares issue. Foreign players remain the largest investors on the local bourse.

Sources said that the transaction could be part of a restructure by the group. “It is not clear at the moment why the company decided to relinquish its shareholding, but it was purely an offshore transaction, which is possibly a move by the company to restructure its portfolio.
“However, most of the investors are wary of the developments that are taking place on the local market in the wake of the new regulations on indigenisation and empowerment by the Government,” said the source. Zimplow is one of the low tier stocks on the ZSE, but is regarded to have inherent potential due to the anticipated rebound in agriculture. The group reported a fortnight ago that profit for the financial year ended 30 December 2009 rose to USD 2m and revenue from exports climbed USD 3.4m and domestic sales advanced to USD 5.6m. However, the company notes that mealie brands decreased 35% and export volumes declined 53% due to increased competition and drought in East Africa. As the economy recovers, CT Bolts, which relies on domestic sales, posted an operating profit of USD 132, 597. The Tassburg division is expected to record depressed volumes as the construction is still facing many challenges occasioned by the liquidity crunch on the local market.

Chairman Mr Oliver Chidawu said in a statement accompanying the companyquotes year end financials that there is critical need for working capital from the financial sector. “The group will continue to pursue a business model that focuses on the steel and fastener products. Mealie Brand will continue to focus on the growth of the export markets and at the same time consolidate the local market. “The El Nino effect is a cause for concern for the division. CT Bolts has started moving towards a growth mode. “The economic platform, which appears ready for a take off, is being hampered by the absence of sufficient foreign direct investment in the economy and lack of working capital within the financial sector,” said Mr Chidawu. He added that the absence of key enablers to economic growth was militating against a broader economic recovery. Explained Mr Chidawu: “Infrastructure rehabilitation has not started, erratic energy and water supplies are a huge threat to businesses in 2010. “Huge wage and salary demands which are being based on consumption rather than economic reasons may also cripple this sector.”

Source: Herald