Econet Wireless Zimbabwe has been asked to defer its extra-ordinary general meeting set for tomorrow until it has addressed technical issues relating to its proposed rights issue.
Econet intends to raise $130 million through a rights offer and linked debentures sale in order to facilitate the servicing of its foreign debt. Under the proposal, shareholders will follow their rights by paying the subscription price of the shares and linked debentures directly outside Zimbabwe into the company’s debt account with Afreximbank.
Econet Global Limited, who were the guarantors of the foreign debt which amounts to $128,19 million, will underwrite the transaction.
In a statement, the Zimbabwe Stock Exchange chairman Caroline Sandura, said the bourse had advised Econet to defer the EGM until certain technical issues relating to the transaction had been clarified to the satisfaction of the ZSE board.
“In this regard, Econet will publish a supplementary circular in due course explaining these issues to the investing public,” she said.
As previously reported concerns have been raised over the condition to have minority shareholders pay directly into an offshore account considering that most local shareholders do not have access to nostro dollars given the situation facing Zimbabwean banks.
Econet, in the circular acknowledges that there is critical shortage of foreign currency in nostro accounts of Zimbabwean banks. Econet said the situation had made it “extremely difficult” for the company and its subsidiaries to service their financial obligations, hence the decision to raise hard currency from members to avoid defaulting.
Other shareholders were also questioning why Reserve Bank of Zimbabwe approvals had not been sought prior to the meeting as they felt this limited their ability to appreciate the implications of the transaction.
There were also concerns on the tradability of debentures and the group’s Class A shares which could easily be converted to ordinary shares.
The deferment comes amid reports the ZSE chief executive Alban Chirume had unprocedurally approved the circular.
In his response, Mr Chirume said: “The ZSE’s role is not to approve transactions but to ensure that the company provides all the required disclosures per the Listings Requirements to enable shareholders to make informed decisions on transactions presented to them. We believe that any further questions should be directed to the company proposing the transaction.”