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BizDay Zimbabwe

ADC opts against board changes

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ABC Holdings Limited majority shareholder, ADC Mauritius will not be bringing any immediate changes to the Pan African group’s board as expected after increasing its shareholding in the group and offering to buy out minorities. While categorically indicating no immediate changes were planned in the ABC board of directors, ABC said the pledge did not amount to a declaration that ADC will be hands tied in effecting changes in terms of the law.

ADC increased its effective shareholding in ABC from 25,94 percent to a controlling 51,94 percent after underwriting the group’s US$50 million rights offer in 2012 to enable the financial group to raise more capital.

In terms of the Botswana Stock Exchange rules on mergers and acquisitions, a shareholder should make a mandatory offer to buy out minorities once they raise their voting rights shareholding above 34,99 percent.

ADC had received a waiver against making a mandatory offer provided it sold shares acquired through the rights offer and if it was prepared not to exercise rights attached to the shares acquired through the cash call.

But ADC decided not to dispose the ABC Holdings shares acquired in terms of the rights issue it underwrote, effectively taking control and giving rise to the compulsory requirement of making a mandatory offer.

“The offer does not intend removing any of the existing directors of ABC following the implementation of this mandatory offer.
“Nothing contained in this paragraph shall preclude the board of ABC from and ABC shareholders from removing any director of ABC Holdings in accordance with the constitution of ABC.”

ADC, which has a primary listing on the BSE and a secondary listing on the Zimbabwe Stock Exchange had offered minority shareholders of ABC BWP5,05 for shares on BSE and US0,60 cents those listed on ZSE.

The group holds independent banking licences in Botswana, Mozambique, Tanzania, Zambia and Zimbabwe.
In terms of the BSE mergers and acquisitions rule, ADC was required to make a mandatory offer to minority shareholders on the same terms as the rights offer it agreed to underwrite for ABC’ capital raise.

However, the minority shareholders among them International Finance Corporation with 15,46 percent stake, Brainworks Capital Management with 11,62 percent and group chief executive Doug Munatsi, representing ABC Holdings directors, rejected the offer it arguing the price was neither fair nor reasonable.

“ABCH minority shareholders holding 100 020 038 ABCH shares have provided irrevocable undertakings that they will not accept the mandatory offer,” ABC said in an abridged circular of the offer to shareholders.

While an independent evaluation of the offer deemed the terms and conditions of the offer to be fair it concluded that they were not reasonable, hence minorities decision not to accept the mandatory offer by ADC.

The rationale behind ADC’s decision to retain the ABC shares included the fact that it intends to unlock significant value in ABC in the next three years through a combination of capital and operational measures.

It has pledged to successfully complete roll out of ABC in executing its operational strategy in unveiling its retail banking franchise, increase market share by 5 to 10 percent in all markets and expand in east and southern Africa.

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