CAMBRIA Africa says it will explore every means possible to acquire further ownership in Radar Holdings Limited after an arbitrator ruled in favour of Caulicle (Pvt) Ltd in a case where the latter contested a transaction used by Cambria to shore up its shareholding in the local firm.
The row erupted last year over 4 000 Hinshaw shares that were used to shore up Cambria Africa’s shareholding in Radar. This was after Caulicle argued that a share offer to AF Phillip for the shares for the purchase of an equity stake in Radar Holdings by Paynet Zimbabwe was revocable.
Cambria beneficially owns Paynet, which holds shares in AF Phillip — one of the shareholders of Hinshaw — which owns 79% of Radar. Caulicle, like AF Phillip, is a shareholder of Hinshaw.
In the arbitration proceedings, Cambria sought, through Paynet Zimbabwe, to enforce its pre-emptive rights to purchase a further 20% of shares in Hinshaw, which has 79,65% shareholding in Radar.
The arbitrator ruled that Paynet Zimbabwe’s pre-emptive rights were not triggered since, in his opinion, no irrevocable offer had been made by Caulicle, a 20% shareholder in Hinshaw, to sell its Hinshaw shares.
Cambria says it will not seek to set the ruling aside, but will continue with its drive to acquire Radar as it also seeks to sit on the Hinshaw and Radar boards to allow Cambria to meaningfully contribute to the direction that Radar is taking.
Cambria CE Samir Shasha on Tuesday told businessdigest that the company’s lawyer had advised it to accept the ruling.“The ruling was that an offer was not made by Caulicle, hence a pre-emptive right did not exist. As the arbitration is final, and only on the basis of a clear and unambiguous oversight of the law can it be challenged in court, our advocate believed that it was best to accept the ruling. Our drive to acquire Radar shares is alive and well,” Shasha said.
“We will consider the purchase of shares outside of the 79% of Radar held by Hinshaw. We will also seek to increase our shareholding in AF Phillip which owns shares in Hinshaw. We are seeking a board seat on the Hinshaw and Radar boards to allow us to meaningfully contribute to the direction that Radar is taking. One concern is the source of clay for Mcdonald Bricks. We have asked management to elaborate on this.”
In December 2018, Paynet Zimbabwe, deployed an additional US$400 000 to increase its effective interest in Radar to 8,98% from 7,83%.
The Radar investment is held through Paynet’s 72,07% (full-year 2018: 62,84%) interest in AF Phillip.
For full-year 2019, AF Phillip was consolidated into Cambria’s statement of financial position with the Radar investment reflected at a fair value of US$2,55 million (US$1,84 million after minority interests) translating into 40 US cents per Radar share.
The board considered the carrying value of 40 US cents per Radar share a reasonable reflection of the investment’s fair value as it is underpinned by its net asset value per share of US$0,58.
“Well, I understand management has sourced clay deposits (a very important ingredient of brick-making), but I want more disclosure. In terms of board sitting, the agreement is that Paynet would have board seats. We will ask that they honour this agreement,” Shasha said.
“Paynet being a shareholder of AF Phillip, which is a substantial shareholder of Hinshaw which, in turn, is the 79% shareholder of Radar,” he said.