Econet rights issue gets nod

Econet Wireless Zimbabwe’s shareholders today voted to approve the highly contentious $130 million rights issue, with 74 percent of the votes at an extraordinary general meeting.

The EGM went ahead despite strong opposition from the Zimbabwe Stock Exchange which on Wednesday ordered the company to postpone it indefinitely until ‘certain technical issues’ were clarified.

About 16,5 percent of the votes were cast against the rights issue while 9,5 percent of the shareholders abstained.

Excluding Econet Wireless Global, the privately held anchor shareholder in Econet Wireless Zimbabwe with a 30 percent stake, 56 percent of shareholders voted to approve the capital call. EWG will underwrite the transaction and could be the biggest beneficiary should the offer be significantly undersubscribed.

The rights issue had generated some controversy largely due to its initial requirement that shareholders pay abroad to subscribe, a move that analysts say would have disadvantaged pension funds and other minorities who would not be able to make offshore payments to follow their rights.

Econet has since dropped that proposal and has created a facility to enable local payments.

Econet says it needs to raise the cash offshore to pay off its external debt, which it has increasingly struggled to amortise due to Zimbabwe’s foreign currency crisis and had put up a facility to allow local shareholders to participate in the rights offer.

The move probably tipped the balance for a yes vote, analysts said.

The mobile operator owes a consortium of creditors — China Development Bank, African Export Import Bank, Ericsson and South Africa’s Industrial Development Corporation — just over $128 million.

Between 2012 and 2014, Econet secured more than $460 million in multi-creditor loans to expand its network and refinance earlier facilities. The company said it intends to clear its secured long term loan obligations using the rights issue and debenture cash, the company’s first capital call since its 1998 listing on the ZSE.-The Source

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