HomeBusiness DigestGreen light for General Beltings/Cernol merger

Green light for General Beltings/Cernol merger

Eric Chiriga

GENERAL Beltings Ltd shareholders have approved the merger deal between the company and Cernol Chemicals Zimbabwe (Pvt) Ltd.

serif”>At the company’s extraordinary general meeting last Friday, the shareholders unanimously approved that General Beltings acquires the entire issued share capital of Cernol.

General Beltings will acquire the entire issued share capital of Cernol, being 1 250 000 ordinary shares of $2 each and will in turn issue 68 847 894 ordinary shares to SMM, the current shareholder of Cernol.

SMM holds 55% and 100% shareholding in General Beltings and Cernol respectively.

The shareholders also approved a proposal by the directors to make a renounceable rights offer.

General Beltings has proposed a $55 billion rights issue to recapitalise its merged operations with Cernol Chemicals (Pvt) Ltd and pay off SMM debts.

Under the terms of the rights offer, 346 904 549 shares in the unissued share capital of General Beltings will be offered to its shareholders on subscription date in cash, at a price of $160 each, in the ratio of 11 new rights offer shares for every five ordinary shares held.

General Beltings will pay the expenses of the rights offer amounting to approximately $5 billion.

“Given the need to recapitalise the merged business and to extinguish SMM debts and provide working capital, the directors have proposed to raise capital by way of a renounceable rights offer,” Godfrey Nhemachena, the chairman of General Beltings, said in a circular to shareholders.

Nhemachena said the inclusion of Cernol in the enlarged group was expected to increase the combined entity’s earnings to a level befitting a company listed on the Zimbabwe Stock Exchange (ZSE).

He said the merged entity would be able to garner critical mass and become a dominant player in the various segments of the industry in which it operates.

However, Nhemachena said the transaction wais subject to approval by the Ministry of Justice, the administrator of SMM and the ZSE.

Nhemachena said the transaction should remain effective unless was rejected by the Competition and Tariff Commission.

General Beltings has two divisions namely Pigott Maskew and General Beltings and General Tire, a dormant company.

The General Beltings division manufactures and distributes gryphon conveyor belting while the Pigott Maskew division is involved in the manufacturing and distribution of rubber products.

Cernol is engaged in the manufacture, importation and distribution of various chemical products used for commercial and industrial cleaning and treatment of water.

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