#MondayBlues: EC Threatens Lawsuit Against Vimplecom Take Over By Gvt,

The Telecel Zimbabwe takeover bid continues to be delayed in twists and turns with the latest being that of Empowerment Corporation, a shareholder with 40 percent stake threatening to sue Netherlands headquartered VimpelCom over pre-emptive rights in the 60 percent sale.
A preemptive right is a privilege that may be extended to certain shareholders of a corporation that grants them the right to purchase additional shares in the company prior to shares being made available for purchase by the general public in the event of a seasoned offering, which is a secondary issuing of stock shares.

By Sting

This move comes after the initial Brainworks attempt to buy Telecel for $20 million failed to materialise following serious inhouse squabbles , which forced the investor to call off the deal to buy the whole 40%.

This also comes as the private equity firm Brainworks Capital management is still rumoured or seen to be in the frame to acquire the local telecommunications firm via an arrangement with EC, which holds a 40pc shareholding in Telecel.

James Makamba

James Makamba

“In the previous months there has circulated on the local and international media details, the effect of which give the impression that Vimpelcom has effectively disposed its beneficial interest in TZ,” he said, in a letter also copied to the American Securities ans Exchange Commission, several other regulatory authorities and local parties.
“Notwithstanding the existence of a shareholder’s agreement, our client, EC, has been deliberately shut out of this process of ‘disposal’ absolutely by Telecel International and ultimately, VimpelCom.” Mlotshwa added. The development follows an announcement in November last year that VimpelCom had agreed to sell its entire shareholding in Zimbabwe’s third largest mobile group to Zarnet, and in a transaction financed by NSSA for $40million.

“Compounding matters  are public pronouncements by the minister (Supa Mandiwanzira) responsible for the telecommunications sector in Zimbabwe to the effect that government has ‘taken over’ TZ under terms that are unclear to us, as has been the source and the mechanisms of the funding in respect of such declared acquisition,” the Titan Law chambers senior partner said.

Mlotshwa told Vimpelcom that his client was contemplating legal action or proceedings against the Nasdaq listed firm and the Zimbabwean government over the Telecel sale.
“…particularly in instances where the present allegation is that a portion of of the purchase price in the amount of $10 million was financed by the Telecommunications Regulatory Authority in Zimbabwe. For the record, this regulatory authority…does not have the power to finance acquisitions of this nature,” the feisty commercial lawyer said.
“…our client hereby formally demands that Vimpelcom and Telecel Intenational make available to it all agreements regarding the disposal of any interest in Telecel
…in order that it decides whether or not to exercise its preemptive rights,” Mlotshwa said.
Aaprt from the sceptre of legal action from its empowerment partner, the VimpelCom has been struggling to get its initial $10 million deposit from Zarnet as the country is battling an acute hard cash shortage.
On the other hand Nssa is not entirely happy about the prospect of losing out on equity holding in Telecel, or just playing the role of financier and where it sees huge opportunities for rich pickings, and acquiring an asset that can add value to its policy holders, and according to recdnt media reports , EC had also offered George Manyere’s BCM 16 percent of its TZ stake for nearly $8 million.
However, Mandiwanzira has poured cold water on the envisaged deal saying President Robert Mugabe’s government through Zarnet or any other designated entity to acquire a 100 percent stake in the local mobile operator. The EC-BCM deal, it was reported, was part of a debt repayment plan to the ‘voracious’ private equity firm and South Africa’s ABSA bank.

#MondayBlues: When a paltry 30cent charge haunts Econet

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