Old Mutual Zimbabwe Limited shareholders this week approved a share buyback meant to facilitate the eventual disposal of shares to indigenous Zimbabweans in line with the company’s compliance to the indigenisation policy.
The transaction is expected to see five million shares worth US$7 million traded over the counter by June 2014, group FD Isiah Mashinya told businessdigest in an interview.
“We are expecting to have about five million shares sold over the counter at US$1,40 per share,” Mashinya said at the company’s 16th annual general meeting .
Chairman Johannes Gawaxab said the transaction was part compliance to the indigenisation Act which will eventually result in 25% shareholding worth about US$100 million going to various interest groups.
“These shares are not listed and they will be sold over the counter,” he said.
Gawaxab described the transaction as a means to create value for shareholders and customers.
“It’s quite good for the shareholders and sustainability of the business in that you have employees who have shares and some customers as well,” he said.
“The employees can sell their shares for cash at some point and provide an opportunity for another group of shareholders to come into the business,” added Gawaxab.
As special business at the 16th AGM shareholders approved a resolution for the company or its duly appointed subsidiary to purchase its own shares.
Under the terms of the share buyback, authority will expire on the date of the next AGM and acquisition shall be of B Class shares, which in aggregate in any one financial year do not exceed 5% of the company’s issued and fully paid up capital.
“The maximum and minimum prices, respectively, at which the shares may be acquired will not be more than 10% above or 10% below the weighted average over the counter price at which such B Class shares were traded, as determined over 30 business days immediately preceding the date of purchase of such ordinary shared of the company,” reads part of the AGM notice.
The company will issue a press statement as soon as it acquires shares constituting, on cumulative basis on the period between AGMs, 5% of the number of fully paid up and issued B Class shares.
The group did not give a trading update for the first quarter of 2014.
In the previous financial year ended December 31, 2013 the group achieved a net profit of US$105 million compared to US$55 million in 2012.
Gawaxab said net profit for 2012 was impacted by the indigenisation initiative which resulted in non-recurrent expenses of US$52 million.
Investment income for 2013 grew by 155% to US$235 million compared to US$92 million in 2012.