ECONET ACTS AGAIN TO RETAIN VMOBILE STAKE
Econet Wireless has instigated yet another court case to defend its stake in Nigerian cellular operator Vmobile, this time taking on First Bank of Nigeria.
Econet has asked the federal high court to appoint arbitrators to resolve a fresh shareholder dispute, claiming that First Bank of Nigeria reneged on an agreement to sell its shares in Vmobile to Econet.
This case is separate from existing legal action taken by Econet to block the sale of any shares in Vmobile to Vodacom.
Econet owns 5% of Vmobile, and claims a pre-emptive right to acquire any shares that are offered for sale in the Nigerian network.
In the matter with First Bank of Nigeria, Econet alleges that the bank offered its 20% stake in Vmobile to other shareholders, following the correct procedure by offering the shares to existing investors first before approaching other parties.
Econet was one of several shareholders that agreed to buy all the shares available on a pro-rata basis. If a shareholder failed to pay on time, the shares were to be offered to the others.
Econet claims that it deposited money for its quota, but heard nothing more. A month later, it received a copy of a letter from the bank telling Vmobile that Econet had bought some shares. Since the letter did not say that any other shareholders had paid, Econet asked to buy the extra unsold shares. The bank did not reply, nor did Econet receive a share certificate for the US$11.3m it paid. Econet was "left with no option but to once again approach the courts for relief", CEO Strive Masiyiwa said.
Masiyiwa believes that the bank and Vmobile thought Econet did not have any money to buy more shares, and panicked when they realised that Econet had managed to bump up its stake in the business. That gives Econet an even greater hold on the operator, which is trying to ditch it as a shareholder.