ZECO Holdings, the perennially under-performing Zimbabwe Stock Exchange (ZSE)-listed manufacturing concern, is seeking shareholder approval to change its business model to property and real estate after disposing of its rolling stock for US$4.5 million as the moribund state of the country’s rail infrastructure threatens the company’s viability.
BERNARD MPOFU
The firm, which is linked to businessman Phillip Chiyangwa (pictured), was incorporated in Zimbabwe by the registrar of companies in terms of the Companies Act on 19 November 2007 in order to consolidate the ownership of Delward and Crittall-Hope.
Delward is the core business of Zeco Holdings Limited and was involved in the manufacture and rehabilitation of rolling stock as its core business. Crittall-Hope is involved in the fabrication of products required in the construction industry such as door and window frames, roller shutter doors and fittings.
At the time Zeco Holdings Limited was listed on the ZSE in 2008, demand for rolling stock products in Zimbabwe was primarily driven by the National Railways of Zimbabwe (NRZ) and the mining sector.
“The uncertainties surrounding the railway transportation industry over the years, and the closure of many mines, and the informalisation of the mining sector have put paid to the Company’s prospects as a Rolling Stock Company. As a result, the company’s shareholders have gone for years without enjoying any capital appreciation or earning a dividend from their continued investment in the rolling stock business,” the company said in its circular to shareholder.
“In order to maintain the sustainable growth and profitability of the businesses going forward, the Board has changed the Company’s strategic focus from a Rolling Stock company to a Residential and Commercial Property Investment and Development Company. The new strategic focus will enable the company to participate in the growth prospects of the Property Development sector which appears to have better prospects than the Rolling Stock industry.”
To achieve the new strategic focus, the company, according to the circular, successfully disposed of its rolling stock assets for US$4.5 million and purchased a residential piece of land measuring 3,6395 square metres with all the developments thereon, situate in the district of Salisbury, called Quinninton Township for the price of US$2 150 000.
The company plans to convene a virtual extraordinary general meeting on 17 August to ratify the sale of rolling stock for residential stands.
“The Company plans to finance the new business using a combination of internal funds, bank borrowings as well as working with joint venture partners who will be able to provide funding for projects. As and when necessary and deemed appropriate, the Company will raise capital from shareholders by way of a rights offer,” the circular reads.
