HomeBusiness DigestMoxon agrees to offload KFHL for US$6,45m

Moxon agrees to offload KFHL for US$6,45m

MEIKLES Africa Ltd majority shareholder John Moxon agreed to sell his company’s 43% stake in Kingdom Financial Holdings Ltd (KFHL) for only US$6, 450 million to rival Nigel Chanakira.

Documents in possession of businessdigest show that Moxon agreed to sell his equity in KFHL to Chanakira for US$6,450 million –– less than 50% of what he initially asked for. Moxon initially wanted Chanakira to pay US$15 million for the stake.
According to the documents, Chanakira and his related companies would swap his shareholding in Meikles Africa Ltd on the ratio that every 1% shareholding in KFHL is valued at US$150 000. This translates into Chanakira paying US$6,450 million for the 43% shares.
A letter from Moxon’s lawyer, Sternford Moyo, dated August 31 reads: “Furthermore and alternatively, the directors of Meikles Ltd will recommend sale of 43% in terms of paragraph 2.2 hereto and recommend a swap transaction in terms of which your client, and its associated companies and individuals including Nigel Chanakira, Sibusisiwe Bango and Callisto Jokonya will swap all shares held by them in Meikles Ltd, estimated to be 6% of the shareholding in Meikles Ltd for the 43% shareholding on the basis that, inter alia, a single percentage of the shares in Kingdom Financial Holdings Limited is worth US$150 000, hence the US$15 million for a 100%. The 43% will cost your client US$6 450 000. The parties will be as per October, 2009 agreement.”
According to the letter, Meikles is prepared to recommend to its shareholders that they uphold the “letter and spirit” of an October 2009 agreement that resolved that the diversified group would sell its 43% stake to Chanakira.
Meikles says Chanakira will have 120 days from the date of the de-merger to attend to the settlement.
“Whichever option is pursued, the parties will enter into a written sale of shares agreement of which it will be a condition that the parties commit themselves to bring to an end all activities and pronouncements which  cause a reduction in the value of the two companies,” added Moyo. “Furthermore, all threats made, including those made by third parties, would have to come to an end. Obviously, if this cannot be achieved, the entire sale of shares agreement will lapse and become null, void and of no force and effect as the rationale behind entering into it will not have been accomplished. The conditions will be more fully articulated in the written agreement.”
Chanakira’s lawyers’ Dube, Manikai & Hwacha Legal Practitioners agreed to Moxon’s proposal this week.
A letter from Chanakira’s lawyers dated September 13 reads: “The consideration for the sale shares will be a swap and exchange of the Chanakira Group’s entire shareholding in Meikles as identified in the October 2009 Agreement.”
Besides reaching an agreement with Moxon, Chanakira was also offered 10% Meikles shares owned by a consortium, Loackape, among them, opulent businessman  Phillip Chiyangwa, Chipo Mtasa, Rugare Chidembo, Temba Mliswa and Langton Nyatsambo,
In a letter to Chanakira’s lawyer, Canaan Dube, Chiyangwa said the sale of his consortium’s shares was in line with a Loackape board resolution.
The letter reads in part: “I write on behalf of Loackape Consortium and refer to numerous meetings regarding the Kingdom Meikles demerger and the final meeting held at my offices in the presence of your Chanakira, Mr Zach Wazara as advisor, Mr Rwodzi-chairman of Meikles and myself representing Loackape Investments (Pvt) Ltd where empowered by a board resolution, we agreed terms of settlement.”
“I have now received a copy of Mr John Moxon’s declaration of Intent to sell 43% of his holding in Kingdom to Mr Nigel Chanakira/Valley field and confirm that our company is in agreement with the contents of the Declaration of Intent. Furthermore, we commit to transact on the same basis raised in clause 2.4 of the Declaration of Intent for the 10% of Kingdom shares which we hold.”
Loackape acquired Econet Wireless Capital’s 10% stake in Meikles Africa Ltd last year at the height of Chanakira and Moxon’s fight. Econet sold the shares to the consortium in a move widely seen in the market as distancing itself from the debacle in a credit sale.
Asked if Loackape had paid for the shares and could sell the shares, Econet Wireless Zimbabwe chairman Tawanda Nyambirai said the consortium could sell its shares to any buyer if value is retained and the transaction does not prejudice his company.       
Nyambirai said: “They (Loackape) have not yet paid for the shares. They came to us and got a six-months extension within which they could pay. If they are selling then maybe they are hoping perhaps to pay us back from proceeds from the sale. But this is consistent with our agreement. For us, it’s an investment decision and we trust that Loackape will make a smart investment choice and that value will be retained. The sale is consistent with our undertaking last year that should they decide to sell, they should sell to Chanakira, but for us it’s an issue of value on our part.”                                              
However, all is said to be unwell in Loackape over the decision to sell the shares. But Chiyangwa said “all matters pertaining to our involvement to the sale of shares have been clarified”. 
He said:  “There is absolutely no dispute in Loackape on whether to sell to Nigel or not. What I am against is that after one puts so much labour in bringing value to all the parties, then one finds himself as a target for abuse by being summoned on short notice to come and explain at the wrong venue. After all, members (of Loackape) were aware of the deal.”
A member of the consortium said members had agreed in principle on the sale, but were still to agree on value.
A member said: “He (Chiyangwa) called me and other members to consult and I agreed in principle, but any transaction has to make financial sense. The sale has not yet been concluded and negotiations are in progresss.”
The Chanakira-Moxon deal comes after central bank chief Gideon Gono and Finance minister Tendai Biti ordered Moxon and Chanakira to resolve the matter by end of August, around the same time Moxon made a declaration of intent  to reach a settlement.


Chris Muronzi

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