Econet says EGM is going ahead, ignore ‘regulatory directive’ from ZSE
HARARE – Econet Wireless Zimbabwe has set itself up for a fight with the Zimbabwe Stock Exchange after it said its extra-ordinary general meeting set for tomorrow will proceed as planned.
In a statement, Econet said shareholders should disregard any notices that are not coming from the company. This comes at the ZSE chairman Caroline Sandura had advised Econet to defer its EGM until it had addressed certain technical issues relating to the rights issue had been clarified to the satisfaction of the ZSE board.
The ZSE had raised eight issues that needed clarification.
However, in a press release sent at 0118hrs, Econet addressed only one concern that had been raised by the market and said in the circumstances, the EGM shall proceed as published in the Circular
Econet said it shall open a Rights Offer account with a local receiving, into which resident Zimbabweans shall deposit the proceeds of the rights offer using cash, bond notes, or electronic money in accordance with the published timetable.
The proceeds, shall be deposited into a Steward Bank account. In exchange for the amount paid by local shareholders, the underwrite shall pay the equivalent of the amount contributed to the international receiving bank (Afreximbank).
“Those resident shareholders who follow their rights by paying into the designated local account shall be deemed as having discharged their obligations as set out in the rights offer circular.”
Econet added that in the event any resident shareholder sells its rights offer shares to non-residents, the foreign currency generated shall be remitted to the Reserve Bank of Zimbabwe and allocated towards the remittance of the money due to the underwriter.
The RBZ shall agree with the company on a schedule for the remittance of the money held on behalf of the underwrite over the period during which the foreign debt was repayable and in equal instalments.
This was however one of the issues that had been raised and could have come out of the meeting held on Monday. FinX understands that the ZSE met yesterday with the Securities and Exchange Commission of Zimbabwe, where it raised several additional issues. Some of the concerns include the removal of proxy voting restrictions after Econet has said that proxy forms of institutional investors must be accompanies by a resolution signed by the investor’s board. It was felt that the requirement is impractical and costly in the time which had been provided.
ZSE also wants the debentures to trade freely either over-the-counter or on a licenced exchange and not subject to approval by a board of Trustees appointed by Econet. The board also want shareholders to be furnished with the terms of the underwriting agreement in order to determine whether all options to extinguish the debt are explored.
Econet was also called on to give justification and benefit to shareholders why the entire amount is being raised from shareholders when only $37 million of that amount is due in 2017. Concerns were also raised on the transferability of shares across Ordinary and Class A shares and the need to give a breakdown on how many Class A shares and ordinary shares, the top shareholders hold.
Ideally, in a normal and efficient market, Econet should not disregard a regulatory directive but should ensure it satisfies all the issues that have been raised. Analysts say there is nothing urgent about the rights issue and any mature board would just defer the EGM. Already their actions have already caused a huge loss in value to minorities basing on the loss on the share price from 30c when the circular was published.
On its part, the ZSE has taken long to come up with a decision on the issue even when it had long emerged that there were anomalies in how the approval process of the rights issue was handled. This has exposed the ZSE as a disjointed organisation due to conflicting statements from the secretariat and the listings committee.