Econet Wireless Global to control 40pct of local unit following $130mln rights offer

Econet Wireless Global to control 40pct of local unit following $130mln rights offer

HARARE, April 21 (The Source) – Econet Wireless Zimbabwe major shareholder ,Econet Wireless Global will control 40 percent of the telecoms firm following a $130 million rights offer which left a quarter of the shares on offer unsubscribed.

The company on Friday published the results which showed that of the 1,345 billion shares and 1,345 billion debentures offered in the rights offer inclusive of treasury shares, shares and debentures amounting to 295,8 million apiece were left unsubscribed, which account for 25,4 percent of the rights offered to shareholders.

The unsubscribed shares and debentures were allocated to the underwriter and anchor shareholder Econet Wireless Global which raises its controlling stake in Zimbabwe’s largest communications network to 39,93 percent.

According to the Zimbabwe Stock Exchange listing rules, this compels EWG to make an offer to minorities.

Before the rights offer, according to officials, EWG  held a 30,02 percent stake in EWZ, Econet Zimbabwe and Econet Wireless Zimbabwe SPV held 9,86 percent and  2,96 percent respectively.

 

Shareholders Before Rights offer Shareholding After Rights Offer Shareholding
Econet Wireless Global (EWG) 492,332,380 30.02% 896,143,275 30.02%
Econet Wireless Zimbabwe 161,705,439 9.86% 276,762,431 9.27%
Econet Wireless Zimbabwe SPV 48,544,432 2.96% 83,084,868 2.78%
Unsubscribed Shares (EWG) 0.00% 295,823,325 9.91%
Others 937,432,340 57.16% 1,433,340,249 48.02%
Total 1,640,014,590 100% 2,985,154,148 100%

Prior to the rights offer, EWZ had 1,64 billion shares in issue.

Following the rights offer, EWG shareholding increased to 39,93 percent, including the 25,4 percent unsubscribed shares while EWZ and EWZ SPV’s holdings declined slightly to 9,27 percent, 2,78 percent respectively.

EWZ has raised $130 million — possibly the biggest ever local capital raise in Africa outside of South Africa — through the highly contentious rights issue to pay off foreign loans despite initial opposition from regulators, the Zimbabwe Stock Exchange and the Security Exchanges Commission.

It owes a consortium of creditors — China Development Bank, African Export Import Bank, Ericsson and South Africa’s Industrial Development Corporation — just over $128 million.

Due to foreign currency shortages in Zimbabwe, the company said it has found it increasingly difficult to service the loans.

The rights issue generated some controversy largely due to its initial requirement that shareholders pay abroad to subscribe, a move that analysts say would have disadvantaged pension funds and other minorities who would not be able to make offshore payments to follow their rights.

Econet dropped that proposal and created a facility to enable local payments. Officials said the proposal was an appeal to its shareholders with access to foreign currency outside the country. The company has enough money to pay off the creditors, but local banks were failing to make the transfers due to depleted nostro accounts, they added.

Econet Wireless Global had also offered other shareholders foreign currency loans so they can follow their rights, they said.

But hard-up Zimbabwean minorities have, in recent years, struggled to follow their rights in similar transactions.

The company traded at 17,45 cents  on Friday, 0,29 percent higher from the previous day.

Masiyiwa left Zimbabwe in 2000, two years after Econet was awarded an operating licence following a protracted legal battle with the government. He has never been back since.

Moving first to South Africa and later the United Kingdom, where he has lived in London for the last 10 years and has business interest throughout the world.