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Econet gets regulatory approval for US$130m rights offer

By , Journalist
Zimbabwe , 28 Feb 2017

Econet gets regulatory approval for US$130m rights offer

Zimbabwe's Econet Wireless has secured regulatory approval for its US$130 million rights offer to raise the capital required to pay off a debt facility that is now maturing, despite earlier disagreements with the Zimbabwe Stock Exchange (ZSE) over compliance issues.

ZSE's board has reportedly suspended Chief Executive Officer, Alban Chirume for allegedly irregularly giving the nod to Econet to go ahead with the rights offer.

The ZSE board had asked Econet to postpone an Extraordinary General Meeting earlier this month during which shareholders voted to pass resolutions for the rights offer to proceed.

The ZSE charged that the offshore rights offer disadvantaged shareholders resident in Zimbabwe.

Econet Wireless said in a notice to investors on Tuesday that it has now secured regulatory approvals for the rights offer to proceed.

"The Company has secured all the regulatory approvals required for purposes of this rights offer. In the event that any resident shareholder sells their rights offer shares to non-residents, the foreign currency thereby generated shall be remitted to the Reserve Bank of Zimbabwe and allocated towards the remittance of the money due to the underwriter," Econet said.

Sources said the foreign currency shortages that Zimbabwe continues to face has resulted in delays in processing offshore payments, which had resulted in Econet opting for the rights offer to be undertaken offshore.

"The country is battling foreign currency shortages and domiciling the rights offer inside Zimbabwe would have resulted in delays remitting the money to the principal debtor," a corporate law expert told ITWeb Africa.

Econet Wireless has more than 9 million mobile network subscribers in Zimbabwe while registered users on its EcoCash mobile money platform have soared to above 5 million. The company has had to borrow funds to upgrade and expand its network and this has seen it switch to a "smart data" network platform.

"The Reserve Bank of Zimbabwe knows the situation because there are other companies whose debt facilities' repayment have been delayed and that's why it agreed to the scheme for resident shareholders," stated Econet.

According to the telco "in order to protect Zimbabwean resident shareholders," it agreed with the Reserve Bank of Zimbabwe to open a rights offer account with a local receiving bank.

"In exchange for the amount paid by the resident shareholders into the company's account with a local receiving bank, the underwriter shall pay the equivalent of the amount contributed by resident shareholders to the international receiving bank, Afreximbank," it said.

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