HomeBusiness DigestEx-M&R CEO Malunga set to bounce back

Ex-M&R CEO Malunga set to bounce back

M&R Zimbabwe chairman Paddy Zhanda, high-flying South African executive Sam Sithole, and Michael McCulloch are said to be members of Zumbani Capital, the consortium linked to M&R Zimbabwe acquisition.

Malunga and Zhanda on Wednesday denied links to Zumbani Capital and the bid for M&R Zimbabwe. However, well-placed sources told businessdigest that management had initially made an offer for M&R Zimbabwe but Zhanda and his consortium seem to have beaten them to the ball.

The same sources said Zumbani would buy M&R South Africa’s shareholding at a discount of 83% to the market price.

Zumbani will only pay just under US$1,5 million for the stake.

It also emerged that the Zimbabwe Stock Exchange (ZSE) wanted the consortium to make an offer to minorities and take the company private in line with ZSE rules.

Analysts question why M&R SA wants to divest at a loss and whether its shareholders have agreed to the deal. They also question why M&R is divesting when the construction sector’s outlook is good.

A total 99 792 515 million shares will exchange hands. Murray Lynton Edwards will do a book-over for the transaction, according to documents seen by businessdigest.

Zumbani will be liable for brokerage fees, stamp duty, ZSE levies, securities commission duty, investor protection, VAT (15%), capital gains withholding tax and costs as required at law by the Competition and Tariffs Commission and the Reserve Bank.

The agreement, copies of which have been lodged with SEC, ZSE, the Youth Development, Indigenisation and Economic Empowerment  ministry and the Reserve Bank, also forces a name change within 90 days. But analysts say M&R’s fortunes would take a downturn once re-branded, given the strength of its international brand.

Although Malunga denies links to Zumbani, his name appears on the agreement of sale which lists his address as 4 Arden Road, Newlands, Harare.
A company search revealed that Zumbani Capital (Pvt) Ltd was registered on March 30, 2012 under registration number 2450/12.

Its directors are Paddy Zhanda, Samuel Sithole of Sandton, Johannesburg, South Africa and Malcom William McCulloch of Rivonia, Johannesburg, South Africa.

McCulloch was an executive director of Murray & Roberts Holdings and chief executive of Murray & Roberts Contractors.

Sithole was Group Financial Director of Brait SA, a company which also has a listing on the Luxembourg Stock Exchange, while Zhanda is the current chairman of M&R Zimbabwe.

Another source, who refused to be named, said Zhanda, a Zanu PF MP, central committee member and prominent businessman, will have the bulk of the M&R stake while the remaining stake would go to Mculloch.

In another development, Addington Chinake, a top corporate lawyer stepped down from the board of M&R two weeks ago. It was not clear at the time of going to print why Chinake resigned.

M&R has been listed as a public company on the ZSE since 1974. The group has two operating divisions — contracting and manufacturing. The contracting division comprises Murray & Roberts Construction Zimbabwe and Proplastics.

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