Econet Protests Zain Sale, Makes Comeback Bid to Nigeria
Indications emerged that all is still not well with Zain as pioneer GSM investors in Nigeria, Econet Wireless International, is determined to return to the country by getting Zain's deal with Bharti Airtel reversed so that it can exercise its right of first refusal on the 65 per cent stake that Zain is selling to Bharti.
An online report had quoted an analyst with Goldman Sachs, Hugh McCaffrey, who in a report said: "in the worst-case scenario, we do not rule out Bharti relinquishing ownership rights in the Nigerian asset."
McCaffrey, who met with Strive Masiyiwa, Chairman of Econet Wireless in the report added that "Econet management intends to reverse the transaction and exercise its right of first refusal on the 65 per cent stake in the Nigerian asset.
"However, an issue that may potentially affect the closure of the transaction is the ownership dispute from minority shareholders of the Nigerian unit," the Goldman Sachs report said.
"Econet management would also likely claim damages against Zain. If successful, in a worst-case scenario, Bharti would have to relinquish ownership rights over the Nigerian assets and perhaps renegotiate the amount it paid to Zain to acquire its African assets, in our view."
The Goldman Sachs analyst also wrote in his report that the Econet Wireless management believed that Zain's Nigerian unit will not be available for sale until its ownership dispute is resolved.
During McCaffrey's meeting with Masiyiwa, the analyst was informed that there are two court cases challenging Zain in Nigerian and Dutch courts. These are the suits by Econet Wireless International, which holds five per cent, and Broad Communications, whose chief promoter is Mr. Oba Otudeko, Chairman of Nigeria's biggest bank, First Bank of Nigeria. Broad Communications hold 14 per cent of the network's equity
Bharti has, however, taken precautionary steps such as securing indemnities and warrants to prevent it from any potential legal ownership disputes, according to international news reports.