Econet Wireless Zimbabwe’s $130 million rights issue was undersubscribed by over 75 percent, mirroring the depth of the country’s liquidity crunch, with the underwriter pumping in $100 million.
Econet Wireless Global, EWZ’s major shareholder with a 35 percent stake, underwrote the rights issue and its investment would significantly raise its shareholding in Zimbabwe’s largest communications network.
EWZ sought to raise possibly the biggest ever local capital raise — and in Africa outside of South Africa — through the highly contentious rights issue to pay off foreign loans which was opposed by regulators, the Zimbabwe Stock Exchange and the Security Exchanges Commission.
It owes a consortium of creditors — China Development Bank, African Export Import Bank, Ericsson and South Africa’s Industrial Development Corporation — just over $128 million.
Due to foreign currency shortages in Zimbabwe, the company has found it increasingly difficult to service the loans.
The rights issue 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 dropped that proposal and created a facility to enable local payments.
Officials said the proposal was an appeal to its shareholders with access to foreign currency outside the country.
The company has enough money to pay off the creditors, but local banks were failing to make the transfers due to depleted nostro accounts, they added.
Econet Wireless Global had also offered other shareholders foreign currency loans so they can follow their rights, they said.
But hard-up Zimbabwean minorities have, in recent years, struggled to follow their rights in similar transactions.
And Econet Wireless Global, the Masiyiwa-owned anchor shareholder in Econet Wireless Zimbabwe, will be the biggest beneficiary, buying up the largest chunk of the shares on offer.
The offer closes on Friday.
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