Reprieve for Econet shareholders

HARARE - Zimbabwe's leading mobile telecommunications company, Econet, has set up a facility to allow local shareholders to participate in its $130 million rights issue, with the assistance of the central bank.

This was after the Zimbabwe Stock Exchange (ZSE) indefinitely postponed the company’s extraordinary general meeting, which is slated for today (Friday), to allow Econet to address the technical grey areas.

Econet, however, said the EGM will go ahead as scheduled as it opened an account with a local bank where resident shareholders can deposit proceeds of the rights offer.

The move is aimed at protecting resident shareholders from challenges emanating from participating in the rights offer by paying for the new shares through a foreign currency deposit.

Initially, Econet had asked shareholders to pay abroad to subscribe for the rights issue, with the group pointing out that it needed to raise the cash offshore to pay off its over $128 million external debt, which it has increasingly struggled to honour due to Zimbabwe’s foreign currency crisis.

“In exchange for the amount paid by the resident shareholders into the company’s account with a local receiving bank, the underwriter shall pay the equivalent of the amount contributed by the resident shareholders and on behalf of the resident shareholders to the international receiving bank Afrexim Bank in accordance with the terms of the circular.

“Those resident shareholders who follow their rights by paying into the designated local account shall be deemed as having discharges their obligation as set out in the rights offer circular and shall be entitled to the issue and allotment of their rights offer shares in accordance with the terms of the rights offer circular,” Econet said.

The listed mobile firm noted that in the event that any resident shareholders sell their rights offer shares to non-residents, the foreign currency thereby generated shall be remitted to the Reserve Bank of Zimbabwe and allocated towards remittance of the money due to the underwriter.

This comes after concerns were raised over the inability of local shareholders to participate and deposit contributions offshore in the capital raising scheme on the back of foreign exchange challenges being experienced in the country.

Econet recently said the rights issue was necessitated by the current liquidity and cash crises, which have resulted in local firms failing to settle their international obligations due to foreign currency shortages.

Econet chairman, James Myers, last year said depletion of the country’s foreign currency reserves had seen the group engaging lenders to explore the situation in a mutually beneficial manner.

Econet’s external creditors include China Development Bank, African Export Import Bank, Ericsson and South Africa’s Industrial Development Corporation.

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