Media group AB Communications (AB) could emerge with full control of Zimbabwe’s newly licensed Rainbow Airlines amid disclosures AB has been given the right of first refusal to snap up the 30% stake being held by its partners in the company.
By Taurai MangudhlaDocuments seen by businessdigest show AB invested into Rainbow Airlines in exchange for a 50% stake in the company, but the shareholding was to later increase to 70% after putting in a total of about US$1,2 million to meet capital requirements. The remaining 30% stake, though contested from as far back as July 2016 between previous shareholders, has been offered to AB.
It is understood that Rainbow is currently being run by investment banker Gilbert Muponda of GMRI Capital after his company invested US$600 000 into the business on behalf of AB.
As part of the loan agreements, GMRI is holding on to all legal corporate documents of Rainbow Airlines until the US$600 000 is fully repaid. Currently, Muponda is the project manager of Rainbow Airlines and AB chief operating officer.
Muponda was co-director of the collapsed ENG Asset management. He was arrested in 2003 on allegations of swindling the company of ZW$61 billion before he left for Canada. Muponda’s partner Nyasha Watyoka remained behind to face trial and was later freed in 2011 by the court for lack of evidence. Muponda was later de-specified and returned to Zimbabwe in 2011.
A source close to Rainbow Airlines confirmed there was confusion over the 30% stake, but said that had no material impact on operations. The source also confirmed Muponda’s instrumental role in the airline.
“What you are saying is true and the argument is academic because right now GMRI has all the documents until its loan is repaid. The company will continue operating smoothly because this is a shareholder issue and not a management one. It’s like saying Econet (Wireless Zimbabwe) had problems with their proposed rights offer, but customers could still make phone calls without a problem,” a source who requested not to be named said.
Rainbow is the latest venture to take to the Zimbabwean skies, with its maiden flight from Harare to Victoria Falls on January 25, but it has already been rocked by turbulence stemming from internal conflict that has now taken a legal route among the owners and strategic partners of the airline.
Information gathered from well-placed sources in the country’s aviation industry suggests there are differences on the extent of shareholding and management structures in the airline which has some strategic partners from South Africa.
“In fact, (the Civil Aviation Authority of Zimbabwe) Caaz under the advice of the Ministry (of Transport) gave the partners of Rainbow Airlines 30 days effective the last week of January to put their house in order or lose their operating licence,” a source in government said.
According to reports by our sister publication NewsDay, Rainbow Airlines is a wholly locally-owned airline that has gone into a business relationship with CemAir Ltd, a privately-owned airline operating in South Africa, which services popular destinations and leases aircraft to other airlines across Africa and the Middle East.
GMRI structured an equity and capital injection deal for the airline which saw the injection of more than US$1 million into the business and a sale of equity of 70% to an institutional investor. Rainbow Airlines CEO Ed Berry was quoted as saying the other 30% is held by a medical doctor in Harare.
Efforts to get a comment form Caaz general manager David Chawota were fruitless at the time of going to print as his mobile phone went unanswered. However, a senior official in Caaz confirmed there had been some disagreements among Rainbow Airlines partners.
“Caaz is concerned with licensing and according to their files they have temporary licensing and seem to be making progress to get fully licenced after their demonstration last month. These shareholders issues are handled by the ministry directly hence the need to speak to the permanent secretary,” the Caaz official said.
Transport secretary Munesu Munodawafa could not be reached for comment, but some officials in his ministry confirmed off the record Rainbow Airlines officials had been frequenting the Ministry of Transport to sort out their disputes.
The ministry officials could however not be drawn to elaborate.
During Rainbow Airlines’s maiden flight, Berry unveiled a 50-seater Bombardier CRJ100 aircraft to service the Harare-Johannesburg and Harare-Victoria Falls routes. Berry said his company expected to get a second CRJ100 aircraft within the first four months of operation.
Earlier this week, Berry said the airline was set to start plying the Harare-Johannesburg route soon.