CFI Holdings drama tests ZSE authority

CFI Holdings drama tests ZSE authority

By Simbarashe Zishiri, HARARE, July 31 (The Source) – The Zimbabwe Stock Exchange is struggling to bring order to the bourse after gloves came off in the fight for control of agro-industrial group, CFI Holdings pitting British tycoon Nicholas Van Hoogstraten’s Messina Investments and Zimre’s Stalap Investments.

The two protagonists have made rival bids to woo minority shareholders, which seemingly put Messina Investments in pole position after its offer came in at double the Stalap offer.

The ZSE entered the fray on Friday, saying it was not informed that Messina has a right to make an offer to buyout  the remaining 17 percent of the total issued shares of the agro-industrial group.

This comes after Van Hoogstraten’s Messina Investments made a ‘tender offer’ on Thursday to buyout all CFI minority shareholders at 46 cents (exclusive of transaction costs), compared to the Stalap offer of 22 cents made on July 13.

A tender offer is a takeover bid in the form of a public invitation to shareholders to dispose off their shares, generally at a price above the market price.

The ZSE’s acting chief executive, Martin Matanda told The Source that the Exchange was not formally advised by Messina Investments that the shareholder now owns 42 percent of CFI, since according to the share register, Messina’s shareholding is below 35 percent.

“The stock exchange has not been informed (by Messina Investments ) of which shareholders are acting in concert to pass the 35 percent threshold,” Matanda said.

“They may have made a consortium of shareholders to come up with the claimed 42 percent. Now there is a procedure for advising the exchange and if that consortium has exceeded the 35 percent threshold, then they need to provide the details, of which at this point we don’t have the details,” Matanda said.

Matanda said while it is allowed to have a fragmented shareholding, Messina and its associates should formally advise the ZSE of their cumulative shareholding which surpasses the minimum threshold required to make an offer to minority shareholders.

“If you look at their offer, it looks like an informal offer to minorities. So all we are trying to do is to have it done properly,” Matanda added.

Some analysts are of the view that the way in which Messina Investment accumulated shares in the market to reach 42 percent shareholding is not good for the market.

“This deal is not good for the market since it was done off the market, which in fact does not promote transparency in the trading of shares. Messina also needs to explain how and when it reached the 42 percent and give reasons why it did not inform the exchange that it had surpassed the 35 percent threshold,” an analyst with a stockbroking firm said.

Another analyst said if Messina had formally  informed ZSE of its shareholding, the stock exchange should have asked the two major shareholders to publish their offer to minorities simultaneously and allow shareholders to choose which offer they prefer.

“Messina Investment’s counter offer is good for minority shareholders since it present opportunities to get value from their shares. That is what we want for an efficient market,” he added.

Stalap Investments, an investment holding company for CFI shares owned by Zimre Holdings and its affiliates,  own a 41 percent stake in CFI after purchasing 13,6 million shares which were disposed by NSSA at 10,55 cents on February 28 this year.

Zimre and its wholly owned subsidiary, Baobab Reinsurance have a shareholding of 34,28 percent apiece in Stalap, while the National Social Security Authority (NSSA) holds the remaining 31,24 percent.

Zimre Holdings chief executive, Ngoni Kudenga earlier in May this year, told analysts that the group, through Stalap Investments,  plans to raise its shareholding in CFI to at least 51 percent, as they envisage a good outlook for the company in the medium to long term.

Stalap had already committed $14 million through its principal bankers to fund the mandatory offer to CFI shareholders and said there are no intentions to delist the agro-industrial group post the mandatory offer.

However, Messina company director Hamilton blamed Stalap for poor governance in CFI, alleging that it has fraudulently sold part of Langford Estatesby  undervaluing  the land at $2,20 per square metre when the true value was around $6 per square metre.

CFI sold 834 hectares Langford Estate in 2015 to Fidelity Life Assurance in a deal worth $18 million; to pay off its debt to local banks.

The dramatic rise in CFI’s share price indicates a bidding war to defend interest in the agro-industrial group.

CFI shares closed at 37,25 cents on Friday, 69 percent higher than Stalap’s original minority offer price. The share price is also more than double the 18 cents it was priced on the market a day before the Stalap offer.

Since the offer opened, a total of 5,419 million shares have exchanged hands, with a value of $1,697 million, representing 5,1 percent of the total shares in issue.

Given that Stalap and Messina collectively hold a total of 83 percent, it implies that only 11,9 percent of the total issued shares of CFI are left in the market, excluding the ones that have been bought since the beginning of the Stalap offer to date.

Messina Investments’ offer of 46 cents values CFI at $48,9 million.