ZECO Holdings is now seeking shareholder approval to adopt a new strategic direction from a “rolling stock” company to a residential and commercial real estate investment and development company.
According to a circular to shareholders, Zeco said it would hold an extraordinary general meeting on August 17, 2022 for the purposes of considering the resolutions.
Zeco said the new strategic direction will allow the company to participate in the growth prospects of the real estate development sector, which appears to have better growth opportunities than the rolling stock industry.
“To achieve the new strategic direction, the company has successfully completed the transaction to sell the company’s rolling stock assets for US$4.5 million and purchase a residential land plot of 3.6395 square meters with all the developments on it, located in the district of Salisbury, called Quinninton Township for the price of 2.15 million dollars,” he said.
Earlier in the year, trading in the securities of ZECO was halted on February 08, 2022 due to ZECO’s failure to notify and seek approval from the ZSE and its shareholders of a material transaction the effect of which changed the sphere of its operations.
However, the suspension was lifted after the company complied with the ZSE directive to issue a detailed statement about a transaction it entered into without the required approvals.
According to the circular, the company plans to finance the new venture using a combination of internal funds, bank loans as well as working with joint venture partners who will be able to finance projects.
“As and when required and deemed appropriate, the company will raise capital from shareholders through a rights offering,” Zeco said.
Under the new strategy, Zeco Properties will be involved in the property development of the group, identifying suitable development sites, acquiring these sites for the development of residential and/or commercial properties, building the properties and then selling or renting them out. these properties.
Zeco Properties will also only engage in property development projects after evaluating each project on its individual merits.
“In making its assessment of the method and timing of these projects, the Group will take into account the Group’s cash requirements, relevant market conditions, growth potential, projected returns and improvements in the commercial value of these projects for the Group.”
Zeco Properties will also acquire development sites either through direct land acquisition or through acquisition or joint venture with other parties, including real estate developers.
Crittal Hope’s primary focus will be the fabrication of all window and door frames that will be used in projects undertaken by Zeco Properties.
At the time of its IPO, the principal business of ZECO Holdings Limited involved the assembly and refurbishment of locomotives, the manufacture and refurbishment of railway carriages, granby wagons, coco pans and dumpsters for the mining industry.
Zeco said the company’s growth was based on the then-planned revival of Zimbabwe National Railways or its planned privatization.
However, uncertainties surrounding the rail transport industry over the years, the closure of many mines and the informalization of the mining sector have damaged the company’s prospects as a rolling stock company.
“As a result, shareholders of the company have gone years without enjoying capital appreciation or receiving a dividend from their continued investment in the rolling stock business,” he said.
He noted that in order to unlock shareholder value, the Company has decided to change its strategic direction.