Econet Wireless Zimbabwe shareholders voted in favour of a $130 million rights issue at the company’s EGM last week.
All resolutions were passed by an average of 74% while 16.5% were against and 9.5% abstained. Taking out the Econet Global vote, the group said 56% would still have voted in favour.
By TechnoMag Reporter
Despite a communication by the Zimbabwe Stock Exchange to have the meeting postponed, the EGM was held in defiance with the notice which had directed the group to defer the meeting until certain technical issues had been clarified.
Before the vote, Econet allowed those that had discretionary mandates to change their votes after modifications had been made to the original circular.
“Those given mandates to vote by their clients can vote as instructed before the circular while those that have discretionary mandates can make decisions in the meeting,” said the group.
Further to that shareholders opined that since RBZ has undertook to remit the local portion of the rights issue to Econet Global, then can’t the same be obtained for the full debt amount, resulting in the rights issue not being necessary? However, Econet said the central bank had only been sympathetic to local shareholders. “RBZ would need to pay an additional $100 million if it is to cover the whole loan repayment, so the rights issue reduces the need for forex payment from the central bank.”
Econet also said that foreign shareholders could not use their balances in the local market to subscribe for the rights issue.
Shareholders also asked why they were being forced to subscribe in debentures when some clients have no debt mandate. There was also a proposal for the company to have a buy back option of the debentures for those that do not wish to hold them as they had a long lock down period.
Econet proposed to amend the resolution (listed as number 4) to add a condition that the debentures should be listed so that investors who do not wish to hold the debentures can trade out of them.
However, some felt that the linked debenture was not necessary anymore since it was brought to avoid dilution of local shareholders who were unlikely to participate on the original terms (of paying forex), now that there was a local receiving bank for local shareholders. But Econet said that the debenture was an instrument which would give investors a definite return.
There were also proposals that the company pay a dividend using the resources that it would have otherwise used to pay debt and the group said it would consider the proposal while also looking at the capex needs of the company.
“Foreign investors are not keen on a dividend because they cannot get the money out. That’s why there is a share buyback resolution instead.”
When asked if Global was not a related party by virtue of them being a guarantor and significant shareholder? The group said it wasn’t.
Meanwhile at the AGM also held yesterday, directors’ remuneration of $1.3 million and the auditors’ remuneration of $1.02 million for the past year were approved.