HARARE (FinX) – Ecocash Holdings has given its shareholders resident in Zimbabwe an option to pay for their subscription to a Rights Offer in local currency after it had earlier insisted on only United States Dollars payments.
The group is seeking to raise US$30.3 million from its shareholders to erase legacy debts that fell due in April this year.
Last month Ecocash board of directors resolved to offer to the shareholders of the company 1,604,220,688 ordinary shares at a subscription price of US$0.0189 per each share, on the basis of 61.925 ordinary shares for every 100 shares already held. Each rights offer share was payable in full in United States Dollars with an option to pay in Econet Wireless Zimbabwe debentures at a price of US$0.06252 per each debenture.
However, in a circular released this morning the group said members who are designated as Resident in the Register of Members of the Company as at the Record Date (the 18th of August 2023) shall have an option to follow their rights in local currency.
“The final ZWL price for the shares shall be determined on the date that the company is allocated foreign currency on the interbank market for the purpose of redeeming the debentures in accordance with the Exchange Control laws of the Country,” said group secretary Charmaine Daniels.
Upon payment of a deposit in respect of each share, calculated by multiplying the US Dollar subscription price for each share by the prevailing interbank rate, plus a 10% margin, a subscribing member shall be issued and allotted each share paid for as not fully paid and subject to a capital call and to the Company’s lien over shares issued but not fully paid for in terms of the Articles.
The capital call on the balance shall be made when the foreign currency has been secured and allocated to the Company, and the applicable Exchange Rate shall be the prevailing interbank rate plus a margin of 10%.
“Interest shall be payable on the Zimbabwe Dollar balance of the subscription price calculated at the average rate at which Steward Bank Limited and Stanbic Bank Zimbabwe Limited would be lending to secured debtors during the period the balance of the subscription price would have remained outstanding. The interest shall be deemed to be part of the balance of the subscription price and shall be part of the capital call.”
Ideally the group had opted for foreign currency payment on the basis that the debenture payments were to be made in hard currency since almost 90% of debenture holders were based outside the country.
But Zimbabwe is currently battling foreign currency shortages with the Central Bank-run foreign currency auction system inadequately resourced to meet hard currency requirements by local companies.
What further complicates matters for resident shareholders is the fact that monetary authorities have also closed taps on ZWL liquidity on the market in a bid to arrest excessive ZWL balances which have been the key driver of the recent exchange rate fluctuations.
The debentures were issued by Econet Wireless Zimbabwe in March 2017 before the unbundling of Ecocash in 2018 as part of a US$128 million capital raise to pay external creditors. It issued 1 166 906 618 debenture value circa US$ 54 million to mature in six years at a value of US$ 72 million including interest maturity in 2023.
