Bid to annul 2008 ZB deal

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FINANCIAL conglomerate, ZB Holdings faces an uncertain future amid revelations that former majority shareholders in Intermaket Holdings (IHL), mainly Nicholas Vingirayi’s Transnational Holdings, together with Econet Wireless Holdings Limited, have teamed up and filed a legal bid to annul the forced takeover in 2008 of the Intermarket group by the former Zimbabwe Financial Holdings Limited (Finhold).

Staff Writer

An application filed in the Supreme Court early this month is seeking to have a 2008 High Court judgment, where the transaction that saw the former Zimbank (now ZB) and Intermarket Holdings takeover approved, set aside.

In 2004, Intermarket Discount House faced a liquidity crisis that could have spread to the other subsidiaries in the parent holdings company. This resulted in the discount house being placed under a corrective order by the Reserve Bank of Zimbabwe (RBZ) in March of the same year.

The corrective order went to further direct the removal of Michael Mahachi, Gibson Muringai and Vingirayi from the board and management of the holdings company even though other subsidiaries were not faced with the crisis.

Prior to the national liquidity crisis that resulted in some subsidiaries of Internmarket Holdings Limited being placed under curatorship alongside other banking institutions, the following were the shareholders of Intermarket Holdings Limited: Transnational Holdings Limited (72,03%); Zimbabwe Banking Corporation Limited (7,32%); Old Mutual Life Assurance Company Zimbabwe Limited (7,17%); Zimbabwe Development Bank (5,23%); Local Authorities Pension Fund (5,18%); Fidelity Life Assurance Zimbabwe Limited (1,94%); and Mining Industry Pension Fund (1,13 %).

A scheme of arrangement was undertaken in 2005 in whom all the creditors of IHL’s banking subsidiaries converted their debt to equity in IHL and the following became the shareholders of IHL — RBZ (50,99%); Transnational Holdings Limited (15,42%); ZB Financial Holdings Limited (8,88%); Mashonaland Holdings Limited (6,71%); ZB Asset Management (2,01%); Old Mutual Investments Corporation (Private) Limited (1,55%); TelOne (1,41%); Genesis Investment Bank (1,40%); Cimas Medical Aid Society (1,25%); Zimbabwe Development Bank (1,13%); Local Authorities Pension Fund (1,12%); Sensemate Investments (Private) Limited (1,08%); others (7,05%).

ZB Holdings Limited then entered into an agreement with the RBZ on November 8, 2006 wherein the RBZ sold to ZB Holdings Limited the 50,99% equity it held in IHL as a result of the scheme of arrangement.

The consideration for the shares was ZW$5 billion.
In 2007, ZB Holdings Limited proceeded to offer its shares to the shareholders of IHL through an undated circular.

While some shareholders took up the offer, others, notably Transnational Holdings Limited owned by the founders of IHL group led by Vingirayi, and Econet Wireless Zimbabwe Limited, declined the offer and proceeded to institute legal proceedings against the company.

Although Econet is cited as one of the applicants, it is not clear from the court papers how it came to be so. However, it could be one of the other stakeholders that held a combined total
of 7% after the scheme of arrangement.

Justice Chinembiri Bhunu validated the agreement that led to ZB Financial Holdings’ acquisition of Intermarket in a judgment delivered in June 2008 unbeknown to the Transnational Holdings and Econet’s legal counsel.

According to heads of argument deposed at the Supreme Court by the two on May 6 this year, which cite ZB Financial Holdings, Intermarket Holdings, RBZ, Mashonaland Holdings, TelOne, Mast Investments and the Mining Industry Pension Fund as respondents, the High Court judgment should be set aside and a High Court application with costs be entered in its place.

The two groups say the sale of shares by the RBZ to ZB Holdings has been challenged on the grounds that the other shareholders of IHL at the time were not afforded an opportunity to exercise their pre-emptive rights in respect of the shares sold by the RBZ to ZB Holdings.

Econet Wireless Limited and Transnational Holdings Limited argue that “other shareholders ought to have been given the opportunity to buy the shares sold to ZB Holdings by the RBZ.

Transnational Holdings also says that other subsidiaries, namely Intermarket Stockbrokers, Intermarket Life Assurance, Intermarket Reinsurance and Intermarket Discount House Zambia did not fall under the jurisdiction of the RBZ.

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