Zeco to focus on residential, commercial property in new strategy

The Herald

Business Reporter

ZECO Holdings is now seeking shareholder approval to adopt a new strategic focus from a “rolling stock” company to a residential and commercial property investment and development company.

According to a circular to shareholders, Zeco said it will hold an extraordinary general meeting on August 17, 2022 for the purpose of considering the resolutions.

Zeco said the new strategic focus will enable the company to participate in the growth prospects of the property development sector, which appears to have better growth opportunities than the rolling stock industry.

“To achieve the new strategic focus, the company successfully consummated the transaction to dispose of the company’s rolling stock assets for an amount of US$4,5 million and the purchase of a residential piece of land measuring 3,6395 square meters with all the developments thereon, situate in the district of Salisbury, called Quinninton Township for the price of US$2,15 million,” it said.

Earlier in the year, trading in the securities of ZECO was halted on February 08 2022 over ZECO’s failure to notify and seek approval of the ZSE and its shareholders of a significant transaction whose effect changed the sphere of activity of its operations.

However, the suspension was lifted after the company complied with the ZSE directive to issue a detailed statement on a transaction it had entered without requisite approvals.

According to the circular, 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,” said Zeco.

According to the new strategy, Zeco Properties will be involved in group property development, identifying suitable development sites, acquiring such sites for development of residential and/or commercial properties, constructing the properties, and then selling or leasing such properties.

Zeco Properties will also embark on property development projects only after evaluating each project on their individual merits.

“In making its assessment on the method and timing of such projects, the Group will consider the cash flow requirements of the Group, relevant market conditions, growth potential, projected returns and business value enhancements of such projects to the Group.”

Zeco Properties will also acquire development sites either through direct land acquisitions or through acquisition of or joint venture with other parties including property developers.

Crittal Hope’s main thrust will be on the manufacturing of all window frames and door frames to be used in the projects being undertaken by Zeco properties.

At the time of its Initial Public Offering, ZECO Holdings Limited’s primary business involved the assembly and refurbishment of locomotives, the manufacture and refurbishment of railway wagons, granby cars, coco pans and skips for the mining industry.

Zeco said the growth of the company was predicated on the then anticipated revival of the National Railways of Zimbabwe or its anticipated privatization.

However, the uncertainties surrounding the railway transportation industry over the years, 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,” it said.

It noted that in order to unlock shareholder value, the Company has resolved to change the strategic focus.

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