KINGDOM Meikles Africa Ltd (KMAL) Chairman John Moxonâ€™s dispute with smaller shareholders deepened last month over an offer by Renaissance Capital (Rencap) to acquire a major stake in the conglomerate.
According to minutes of a KMAL board meeting held on September 25, Rencap has made an offer of US$2 per share for 15 926 100 shares. The deal was worth US$31,8 million.
The minority shareholders have since sued Moxon to block his attempts to make changes to the KMAL board. Minutes of the meeting were annexed to Moxonâ€™s answering papers filed this week.
Information to hand shows that the other directors and minority shareholders were against the move to acquire the new entity as itÂ purportedly undermined the minority shareholders and the companyâ€™s future plans.
According to the minutes, KMAL director Cecil Thorn said Rencap was notified of the convening shareholdersâ€™ notice which proposed the stepping down of group chief executive officer Nigel Chanakira and two other non-directors, Callisto Jokonya and Rugare Chidembo. But the trio remained defiant.According to the minutes, Thorn proposed that negotiations be entered into with Rencap to conclude the transaction.
â€œThorn said the US dollar funds will be used for the groupâ€™s capital expenditure and to resuscitate group operations, particularly retail,â€ read the minutes.
The board according to the documents agreed with Thornâ€™s proposal and resolved that the transaction be continued to accommodate the new deal with Rencap. The board also agreed that if Rencap maintained its offer of US$2 per share, then the offer would be accepted leading subsequent rights offer of KMAL shares at a price of US$2 000 per share.
Sources said the transaction which is viewed in favour of the major shareholders was aimed at enticing smaller shareholders to dispose of their shares. KMAL traded at $3 700 yesterday which translate to about US$0,75.
â€œThe proposal to accommodate Renaissance was a sweetener for minority shareholders to sell their shares to bring in US$32 million in new money. It was good for Moxon, who would have solid ground to argue against the proposed rights issue saying he has the money to buy the Cape Grace,â€ a director close to the deal said.
Â Moxon is alleged to have signed an agreement of sale for the Cape Grace which is supposed to have been signed by Chanakira as the chief executive.
Some senior officials at the company said the clash between Moxon and Chanakira centred on the latter questioning Moxonâ€™s quest to make executive decisions as chairman.
There has been various correspondence between Kingdom Miekles Africa Group and Cape Grace to have the money repatriated but to no avail.
Moxon is said to have told the board that he had the money to buy the Cape Grace when they pulled out of Mvelapanda and as such were not externalising any money.
The proposed coming on board of Rencap arose after a query by directors Sibusisiwe Bango and Thorn over the Staff Share Purchase Schemes (SSPS), were 680 000 shares had been issued to the SSPS. On September 24 $10 billion was raised by Stanbic for the issue of another 400 000 shares. The target was to get three million shares. Monthly meetings were proposed to monitor the progress of the share scheme.
Chanakira then reported that he had managed to secure the full funding for the remaining balance of approximately 20 million shares. He then proposed that the balance of the remaining shares for the SSPS under the control of the directors be issued if and when the necessary financing needed to pay KMAL for their issue was raised.
Before this was voted on, both Chanakira and Thorn outlined the cash constraints the group faced and which the funds raised from the issue of all the shares to the SSPS will address.
â€œThe board was supportive, but asked that a paper be circulated before a decision is made on whether or not to issue shares,â€ the minutes said.
By Paul NyakazeyaÂ