Econet Evades Specification in Zimbabwe
By selling Econet Wireless' 10% stake in Kingdom Meikles Africa Ltd (KMAL), the country's largest mobile phone operator avoided government specification a fortnight ago, Business Digest has established. Sources said Econet Wireless chairman Tawanda Nyambirai would also have faced the same fate had the group not sold its shareholding in KMAL.
The sources said although investigators did not finger Nyambirai in the KMAL saga, he was facing imminent specification by mere virtue of being chairman of Econet. Following the specification threat, Nyambirai reportedly opted to sell Econet's stake to avoid the action. Earlier, government appointed investigators -- BCA Consulting -- attempted to seize hard drives from Nyambirai's computers hoping the hardware would have key information that would assist them in their probe.
Econet sold its shares to Loakcape Investments, a consortium of local business people. Philip Chiyangwa, Temba Mliswa, Chipo Mtasa, Langton Nyatsambo and Rugare Chidembo make up the consortium, but the market has been questioning whether the businesspeople would be able to raise US$17 million in the current environment for the stake. Analysts believed that lack of liquidity on the market could present an onerous task on the group's ability to come up with the funds.
No cash has exchanged hands yet but the consortium has to raise US$17 million inside a year, sources said.
The consortium, according to sources, is essentially holding Econet's shares in trust until cash changes hands. Should the individuals raise the cash, US$4 million apiece, the deal would be sealed.
The same sources said the deal was a deliberate strategy by Econet to lay low until the KMAL dispute dies down. In the event that an amicable settlement is found in KMAL, Econet could still call the deal off. But there is respite for the consortium, according to the sources. Should things calm down at KMAL, the consortium would walk out with some cash in the bag.
The parties agreed that in the event that KMAL dispute is settled inside a year from sale, the consortium would get 10% fair value of Econet's KMAL shares on the day of trade, a handsome deal should the share price move above 70cents -- the agreed price at the time of the deal.
The sources added that there was no conflict of interest on Chipo Mtasa's part saying she got the nod from Rainbow Tourism Group chairman Patterson Timba -- a close business associate of Econet founder Strive Masiyiwa.
Analysts said the deal also exposed unusual relations between the corporate and political worlds when the stakes are up. As part of the arrangement, Mliswa and Chiyangwa, political princes, would also look out for Econet and KMAL's interests and pull political strings should the need arise. Mliswa is a former fitness trainer and has listening ears in the old order of Zimbabwean politics.
He has interests in the tobacco industry and recently sold his 8% stake in Premier Banking Corporation, while Chiyangwa, on the other hand, is said to be President Robert Mugabe's nephew.
According to the same sources, government had also targeted KMAL chairman Much Masunda, who has a rocky relationship with investigators.
BCA Consulting clashed with Masunda over the latter's bid to block a planned Extraordinary General Meeting (EGM) last month. Masunda differed on the interpretation of the law with the investigators and accused them of being defamatory.
The investigators also said that there was evidence that there were cases of "bad faith, connivance and outright misrepresentation on the part of some board members of KML.
Investigators accused Masunda of communicating with John Moxon without consulting them. In his response, Masunda said these accusations were defamatory to himself and to other persons who were mentioned in the notice.
"I record my resentment of the suggestion that I have, at any time, acted other than in the interests of the company, or in a manner likely to promote the interests of any group of shareholders to the exclusion of the interests of the company, or other shareholders," said Masunda.
The Zimbabwe Independent