via New twist to Telecel wrangle – DailyNews Live 14 November 2014
HARARE – Harare businesswoman Jane Mutasa’s Indigenous Business Women Organisation (IBWO) and several other Telecel Zimbabwe (Private) Limited (Telecel) founding shareholders forfeited their Empowerment Corporation (Private) Limited (EC) shares after failing to pay for their allotted scrip, documents show.
This comes as the Harare businesswoman and her family’s investment vehicle Selpon Investments (Private) Limited (Selpon) have reportedly filed a High Court application to seek the reversal of an of 72 percent worth of EC shares to James Makamba, and his company Kestrel Corporation (Kestrel).
While the seven founding shareholders, including Philip Chiyangwa’s Affirmative Action Group, farmers, the Zimbabwe National Liberation War Veterans Association (ZNLWVA) and the Zimbabwe Small Scale Miners Association (ZSSMA), were allocated shares between nine to 15 percent, it was only Kestrel, the AAG and ZSSMA, which paid their commitment fees in full.
According to information at hand, the parties – including Integrated Engineering Group (IEG) – were also expected to pump in 60 percent of a $2 million requirement to operationalise the venture, but Mutasa’s IBWO only managed to partly pay for the two contributions.
On the other hand, Leo Mugabe’s firm out rightly failed to pay both the commitment fees and a portion of its loan obligation.
As such, the exiled businessman’s firm chipped in with the biggest security contribution – and equivalent of Z$16 million then – to rescue the other shareholders, and which money was secured from CBZ Bank Limited.
This was backed up by resolutions of a May 21, 1998 meeting in the capital and whose binding resolution was that anyone who had failed to subscribe for their shares “would forfeit them to other shareholders on a prorate basis”.
With EC being formalised – through the appointment of a five-member board – in June 1998, documents at hand also show that various pressure groups not only transferred scrip to private entities, but voluntarily sold down their positions to Makamba’s Kestrel.
For instance, Chiyangwa’s Native Telecoms and the Magamba Echimurenga Housing Scheme (Magamba) cashed in their shares, with the former pocketing a Z$14 million cheque.
Despite the fact that Mutasa’s Selpon had taken up some shares allocated for IBWO, the latter sold at least two parcels, which also spawned part of the love-hate relationship between Makamba and the feisty businesswoman.
“In May 199, IBWO sold 1 500 of its shares and subsequently sold a further 191 of its shares, leaving it with 1 692 shares. The IBWO shares were offered to the remaining on a prorate basis,” said a source close to the developments yesterday, adding Selpon and ZSSMA declined to acquire the shares, and which were eventually acquired by Kestrel.
On the other hand, Magamba sold its entire 6 764 shares in 2000 and 2001, respectively.
Crucially, documents also show that whenever a shareholder wished to sell, valuations were always done by KPMG Chartered Accountants and who were also Telecel’s long-standing financial advisors.
While Mutasa and Selpon have now complained about Makamba’s alleged irregular dealings, it is understood that the share sales were not only bound by the EC’s shareholder agreement, but always done on a prorate basis.
As the protagonists continue with their battle, it has also emerged that its Thakor Kewada who has always represented EC since formation and any share transfers that have taken place over the past 16 years have always been informed by the May 1998 resolution.
Moreover, the Company Act – and EC articles – expressly state that investors have powers over shares only after they have been “transferred” to enable capital gains tax payments and not just allotted.
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