Econet Wireless says its extraordinary general meeting to consider a proposed $130 million capital raise will go ahead as planned on Friday, setting itself on a collision course with the Zimbabwe Stock Exchange which directed the company to postpone it until ‘certain technical issues’ are clarified.
The rights issue has generated some controversy largely due to its requirement that shareholders pay abroad to subscribe, a move that analysts say would disadvantage pension funds and other minorities who might not be able to follow their rights. Econet says it needs to raise the cash offshore to pay off its external debt, which it has increasingly struggled to amortise due to Zimbabwe’s foreign currency crisis.
ZSE chair Caroline Sandura said in a statement issued late on Wednesday the bourse asked Econet to defer its vote on the transaction. But Econet countered with its own statement in which it said it had, along with the central bank, put up a facility to allow local shareholders to participate in the rights offer.
It said a rights offer account has been opened with Econet’s wholly-owned subsidiary Steward Bank, where local shareholders would deposit the proceeds of the rights offer in accordance with the timetable published in the company’s circular dated 17 January 2017. The underwriter, Econet Global, will pay the equivalent of the amount contributed by the resident shareholder 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 and shall be entitled to the issue and allotment of their Rights Offer shares,” said Econet.
“In the circumstances, members are advised that the extraordinary general meeting shall proceed as published in the circular,” it added, saying members should disregard “any notice to the contrary not coming from the company.”
ZSE’s Sandura is yet to respond to the latest move by Econet.