LONDON-listed Cambria Africa Plc is in discussion with Old Mutual Zimbabwe to get a fair value measurement for its portfolio in the country’s largest financial services company following its suspension from trading on the Zimbabwe Stock Exchange.
Through General Notice 583 of 2020 contained in an Extraordinary Government Gazette in March Finance minister Mthuli Ncube suspended the fungibility of Old Mutual Limited, PPC Limited and Seed Co International Limited for 12 months amid allegations of abuse of the fungibility platform.
Before this, Cambria had purchased 292,547 Old Mutual shares on the Johannesburg Stock Exchange (JSE) for £350 000 (US$445 343,50).
Cambria CE Samir Shasha, in an operational update, said the company sold 90 000 shares of Old Mutual to finance its arbitration case with regards to Radar Holdings Limited shares and to increase its shareholding in Radar from 8,98% to 9,74% on February 28, 2020.
“These shares were purchased and removed from the Johannesburg Stock Exchange (JSE) to the Zimbabwe Stock Exchange (ZSE) to guarantee Paynet’s pursuit of its bid for shares in Radar.
In the event of failing in its bids, the investment in Old Mutual allowed the company to repatriate these shares to the JSE due to the fungibility of the Old Mutual Shares between LON:OMU, JSE:OMU and ZSE:OMU,” he said.
In the course of holding shares in Old Mutual on the ZSE, a number of events have prejudiced the free and fair pricing of Old Mutual shares on the ZSE.
Concurrent with the removal of these shares, the government imposed a three-month vesting period on the ownership of dual-listed shares, particularly Old Mutual.
Following the announcement of a 12-month suspension of the fungibility of Old Mutual shares, on June 26 government halted trading on the ZSE — announcing that the implied international value of Old Mutual shares was responsible for the rapid depreciation of the Zimbabwean dollar.
Shasha said at the time of fungibility suspension, the value of the company’s Old Mutual portfolio was US$589 000 at the interbank rate, and at the time of the ZSE’s suspension of trading in ZSE:OMU, the portfolio value had fallen to US$292 000.
“The company has been in contact with Old Mutual Limited’s head of investor relations and its head of legal since 29 July 2020, requesting action on behalf of shareholders on the ZSE.
The company continues to pursue a substantive response and will update its shareholders on its efforts to achieve fair value for its Old Mutual portfolio,” he said.
Excluding the potential market value or compensation for Old Mutual shares, the company and its subsidiaries currently hold cash resources of US$1,79 million in accounts in the United Kingdom and Mauritius.
The company reported net asset value (NAV) of US$7,17 million (1,32 US cents per share) as of February 29, 2020 and is expected to remain at or near these levels.
Significant components of the NAV include a US$$2,5 million valuation of Paynet Headquarters and its adjacent plot with main road frontage, and an investment in Radar valued at US$1,74 million.
Shasha said Cambria’s subsidiaries are operating at near or above cash flow break-even levels since publication of the company’s mid-year results in February 2020 as the company continues to pursue a defensive strategy to protect its resources and assets.
Meanwhile, the company won in a landmark case a US$31 500 award plus interest and costs by the Supreme Court of Zimbabwe.
The company had lodged a claim against Nemchem International due to its refusal to settle its debt in foreign currency.
Nemchem appealed against the High Court ruling at the Supreme Court, which upheld the judgement. Cambria has applied to remit the award in foreign currency from its subsidy going forward. He said as a result of the uncertain economic outlook, the company’s Zimbabwe operations have been significantly downsized to contain costs.
“The company has engaged the services of ABC Auctions to achieve best value for assets it cannot dispose of on an arm’s length basis. The company’s board of directors is actively evaluating investment options and strategies in view of the rapidly changing circumstances it is facing,” he said.