HomeBusiness DigestFML/RFHL dispute looms

FML/RFHL dispute looms

A DISPUTE is simmering between First Mutual Life (FML) and a new major shareholder, ReNaissance Financial Holdings Ltd (RFHL) over board representation after RFHL acquired a 25% stake in the insurance counter.

NT face=”Verdana, Arial, Helvetica, sans-serif”>RFHL has acquired a 25% stake in FML and has already written to the insurance company’s chairman, David Murangari, to demand board representation. Speculation is also rife on the market that telecoms magnet Strive Masiyiwa and banker Nigel Chanakira have been quietly buying shares in the company.

A letter to Murangari from RFHL chairman Professor Christopher Chetsanga, dated November 11, set out the demand.

“We address you on behalf of ReNaissance Financial Holdings Ltd Group who have acquired 22,59% of the issued share capital of FML,” the letter reads. “In addition RFHL manages for its staff about 0,54% of the issued share capital of FML.

“In accordance with the memos and articles of FML we believe that the shareholding we hold or manage entitles us to a minimum three board seats.”

But FML, downplaying suggestions of a dispute, yesterday said RFHL’s representation on the board was not automatic.

“First Mutual Ltd is bound by the articles of association which states that shareholders do not have automatic entitlement to board representation,” said CEO Douglas Hoto. “The normal procedure is for shareholders to elect directors at the company’s annual general meeting.”

But RFHL sources yesterday said the company wanted board representation immediately. The company has already forwarded two names of potential board members. RFHL would like the two directors to sit on the board until the holding of the AGM at which they will step down but avail themselves for re-election.

RFHL has been buying large parcels of FML shares through New Africa Stockbrokers with the largest parcel of 582 117 186 shares at $180 each bought on October 21. (see table).

But market watchers said RFHL had been buying FML shares since its relisting on the Zimbabwe Stock Exchange in June and is likely to continue doing so.

Capital Alliance, an investment vehicle owned by FML executives led by former chief executive officer, Norman Sachikonye, acquired a 20% stake in the insurance concern.

The consortium’s acquisition was financed by ReNaissance Merchant Bank (RMB) at a cost of $30 billion while share certificates for the stake were ceded to the financial institution as surety for the loan.

The continued failure by Capital Alliance to pay the loan resulted in RFHL taking over the ceded shares in FML.

The investor required by Capital Alliance would have paid $26,6 billion to RMB while meeting the consortium’s total cost of financing the deal and allowing it to retain at least 5% in FML.

Capital Alliance and RMB are locked in dispute over the shares with Capital chairman Hoto accusing RMB of fraudulently transferring the shares which it has kept as surety.

Other financiers of Capital Alliance included ENG Capital who advanced $4 billion, Regal Asset Manager (Royal Bank) $6,5 billion while Rapid Financial Holdings contributed $4,2 billion. – Staff Writer.

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