AIM-listed LonZim said yesterday it had agreed to hold an extraordinary general meeting on July 30 to show South African-based shareholder AMB Capital that its criticism of investments made so far and calls to dismiss directors would not be supported by other shareholders.
AMB is at loggerheads with LonZim, in which it holds a stake of more than 22%, over its acquisition of companies in Zimbabwe where AMB says LonZim has overpaid for loss-making assets.
It has also questioned why pan-African investor Lonrho â€” also a shareholder in LonZim â€” is receiving management fees from LonZim, saying there should be an armâ€™s-length relationship between the two firms.
Lonrho has four directors on the LonZim board and AMB wants them replaced with its nominees so that it can have better oversight over the companyâ€™s operations.
The war of words between the two companies has been worsening over the past few weeks, with AMB accusing LonZim of a lack of transparency and demanding that the meeting be held and its investment strategy be scrutinised. LonZim is invested in the telecommunications, hotel, pharmaceutical and aviation sectors in Zimbabwe, where it wants to become one of the major foreign investors taking advantage of the countryâ€™s recovery after decades of mismanagement.
Its investment in Zimbabwe, including the Beira corridor in Mozambique, mirrors the Africa-wide expansion strategy being pursued by Lonrho, which owns or operates companies in 17 countries.
LonZim CEO Geoffrey White has labelled plans by AMB to consider selling some of the LonZim assets in Zimbabwe as â€œasset strippingâ€.
AMB denies this allegation, and a spokesman said this week all it wanted was to understand the rationale of the investments made, and decide which made commercial sense and which had no chance of making a profit, and should be sold.
â€œIf our request for board representation is accepted, we can talk about where we are going forward,â€ the spokesman said. Yesterday, White said there was no compelling reason for AMB to have board representation because the company had so far failed to demonstrate how this would benefit LonZim.
â€œThey have not yet demonstrated any value they could bring to the board and what they would bring in terms of deal flow to the company.â€
He said he was happy the meeting would be held because it would give LonZim the opportunity to show AMB that its plans to change the investment strategy were â€œunsoundâ€. â€” businessday.