Econet Wireless Zimbabwe (EWZ) is on a collision course with the Zimbabwe Stock Exchange (ZSE) board over the convening of an extraordinary general meeting slated for today.
Despite giving in to pressure from the Securities Commission of Zimbabwe, which wanted local shareholders to follow their rights using bond notes, the company could now face censure from ZSE for proceeding with the meeting.
As reported by the Zimbabwe Independent, the ZSE last week summoned the listed mobile network operator over contentious issues in its US$130 million rights offer after the country’s capital markets regulator expressed concern that the capital-raising initiative could result in the unfair treatment of local investors.
Econet is currently seeking shareholder approval for a capital raise of US$130 million by way of a rights offer of ordinary shares and linked debentures in order to facilitate the servicing of its foreign debt.
Shareholders are expected to vote for or against the rights offer on February 3.
In its initial circular that unnerved local investors, Econet had announced that proceeds of the rights offer must be paid by each participating shareholder into the debt service account held by EWZ with the African Export and Import Bank outside Zimbabwe and for the proceeds to be applied by the company to repay its secured loan obligations.
Given the current cash crunch, use of the internally tradable bond notes and the scarcity of the United States dollar, such an arrangement could have prejudiced local shareholders resulting in many not following their rights.
The company, which has since waived this provision allowing local shareholders to participate, also announced that it would convene its extraordinary general meeting despite a directive from the ZSE board chaired by Caroline Sandura, causing confusion over the legality of the meeting.
“Econet Wireless will be proceeding with its EGM scheduled for 3 February 2017. Shareholders are advised to submit their proxies and attend the meeting,” the company said in a statement.
“The meeting was sanctioned by the committee of the Zimbabwe Stock Exchange, which is the competent authority and that approval has not been withdrawn. The board of the ZSE chaired by the company secretary of TelOne has no jurisdiction over the matter. All communication pertaining to the meeting that is not issued by the company should be ignored.”
Earlier on, the ZSE board had issued a statement announcing that the company’s extraordinary general meeting would only proceed after Econet had addressed issues raised by the regulator.
“It has come to the attention of the Zimbabwe Stock Exchange board that there is uncertainty regarding the Econet Wireless Zimbabwe Limited extraordinary general meeting scheduled for 3 February 2017,” ZSE chair Sandura said in a statement.
“The ZSE board would like to inform the investing public, that it has advised Econet to defer the EGM until certain technical issues relating to the rights issue transaction have been clarified to the satisfaction of the ZSE board. In this regard Econet will publish a supplementary circular in due course explaining these issues to the investing public.”
ZSE chief executive Alban Chirume directed all enquiries to Sandura, who was not reachable via her mobile and office at the time of going to print.