AIM-listed LonZim could be forced by its shareholders to sell most of its investments in the region when it convenes an extraordinary general meeting (EGM).
The company has been dragging its heels on the date of the EGM.
AMB Ireland, a 22,12% shareholder, says although it requested an EGM in April, LonZim was still to announce a date.
At the EGM AMB Ireland will seek to remove four directors and reconstitute the board to pave way for the sale of the companyâ€™s â€œnon profitable and start-upâ€ investments.
In April, AMB Ireland duly requested an EGM through the registered owner of its LonZim shares, Pershing International Nominees Ltd but LonZim is seemingly ignoring the demands.
LonZim said then that the â€œEGM would most likely be held in Juneâ€ but no date has been set yet.
â€œAMB Ireland does not believe it is right and proper for the board to ignore a duly served shareholder requisition in this way,â€ the company said.
Damille Partners IV, a 6,46% shareholder in LonZim, has also thrown its support behind AMB Ireland and will support all its resolutions.
AMB capital alleges there is a blatant conflict of interest on the part of LonZim directors.
The financial services firm says of the Â£18,96 million capital that LonZim deployed in investments, Â£9,78 million, approximately 51,6% of the total capital, has been invested in related party transactions or transactions involving Lonrho and or its employees, â€œeither immediately or in the futureâ€.
The company cited LonZimâ€™s acquisition of Lonrho shares in a private placement without shareholder approval as another case in point.
The AIM company also acquired Blueberry International Services Ltd from Lonrho and the lease by LonZim to Fly 540 Uganda, a Lonrho subsidiary, of the two aircraft purchased by LonZim in October 2008.
LonZim also bought a 79% shareholding in Aldeamento Turistico de Macuti, SARL (ATdM), the holder of a Beira property on which a hotel will be developed, which will be â€œoperated and managed by an entity owned by Lonrho plcâ€ as announced on February 20 2008.
AMB says LonZim has not made investments in sectors where it has â€œobvious expertiseâ€ while querying the high number of â€œnon-profitableâ€ ventures which will require significant management and developmental capital.
Instead, AMB feels that there is need to appoint an independent board that will sell the companyâ€™s assets to create value for shareholders and lower administrative costs which continue to accumulate mainly largely for the benefit of parent company, Lonrhoâ€™s benefit.
AMB is proposing Andrew Sprague, Michael Vosloo, Brett Miller and Rhys Davies be appointed to LonZimâ€™s board.
â€œAMB Ireland does not believe that LonZimâ€™s investments will benefit from any turnaround in Zimbabwe, as the current LonZim structure does not have the management to operate and turn around the assets, nor will it be able to source funding for these businesses at commercial rates,â€ AMB added.
The current LonZim board is comprised of four executive directors, who are also directors of Lonrho, a 24,53% shareholder and the management services provider and two independent non-executive directors.
According to LonZimâ€™s February 2009 interim results, the tangible net asset value excluding goodwill and other intangibles per share of Lonzim was 58,6 pence per share, a 41,4% reduction in value for Lonzimâ€™s initial shareholders. The Irish company says based on current capital invested, LonZimâ€™s recurring administrative costs annually are estimated to be in excess of Â£500 000, of which a minimum of Â£333 333 is paid to Lonrho as the management fees while another Â£48 000 is paid to the executive directors as directors fees.
LonZimâ€™s revenue in the interim period to February 28 2009 was Â£495 000, while losses for the same period were Â£716 000.
BY CHRIS MURONZI