Mutanda in shock CAPS exit plan

Source: Mutanda in shock CAPS exit plan – The Standard

IN a shock decision, the businessman who has fought a seven-year battle against government for control of a key pharmaceutical outfit says he now wants out.

War veteran Frederick Mutanda, who for many years presided over CAPS Holdings Limited, the drugs empire, before government said it was moving in seven years ago, has written to the ministries of finance and industry introducing an investment banker charged with handling his divestiture, Standardbusiness can report.

CAPS, which de-listed from the Zimbabwe Stock Exchange (ZSE) in 2011, became the subject of government takeover plans after hitting a dark patch, with authorities terrified its collapse would spark off a dire drug crisis.

Before the state moved in, the parties had agreed that government would pay US$20 million to take over Mutanda’s stake in the former blue chip

However, in a series of letters in the past year, the businessman has claimed government has reneged on its undertaking, and he wanted his shares back.

As late as January this year, Mutanda was fighting to regain his 88% shareholding in the business.

On the other hand, the government appeared determined to continue calling the shots at CAPS, to control drug production.

In letters obtained by Standardbusiness Friday, the two parties appeared to have opened fresh negotiations in which government had asked him if the firm was not a legal minefield.

The businessman denies any record of legal actions against the business, but sets out his divestment conditions, and says he is ready to walk out any time.

“Subject to mutually agreed terms, including apt transaction consideration, I am willing and ready to dispose my residual shareholding in CAPS Holdings Limited,” the businessman says in a letter to Finance and Economic Development deputy minister Clemence Chiduwa dated April 8, 2022.

“As of date, that shareholding translates to about 88%. The existing shareholding structure shall change upon implementation of resolutions passed in a general meeting of members of CAPS Holdings Limited on 30 June 2011. In terms of those resolutions, CAPS Holdings Limited is to be unbundled. Put simply, existing shareholders of CAPS Holdings Limited would end up directly holding issued and paid-up ordinary shares in the unbundled new entities. In terms of an agreement with the Reserve Bank of Zimbabwe dated 13 November 2015, I agreed that, subject to payment of a consideration of US$20 million, the government of Zimbabwe would acquire or acquires my shareholding interest in…two demerged companies. During our interaction, you sought my undertaking regarding any legal matters that may be pending surrounding CAPS Holdings Limited and entities in which I have shareholding interest. I am not party, and have not been party, to arbitration proceedings between the trustees for the time being of an entity named the CAPS Pharmaceutical Trust and the Government of Zimbabwe. I have at all material times sought dialogue and engagement regarding the acquisition of my shareholding interest by the government of Zimbabwe in those businesses in which I have vested rights and interests,” Mutanda added.

In a subsequent letter to Industry and Commerce minister Sekai Nzenza, the businessman introduced his representative in exit negotiations.

“In pursuit of the intent stated in my letter of 08 April 2022, be pleased to take notice that, as ultimate beneficiary shareholder of most of the issued and full paid ordinary shares of CAPS Holdings Limited, and with immediate effect, I have appointed and formally mandated an investment banking and enterprise governance professional, one Christmas Mazarire to facilitate actualisation of my entire divesture from CAPS Holdings Limited,” he said.

In January, Mutanda had piled pressure on government to return his shareholding, claiming it had failed to honour an undertaking.

“I write this letter to confirm the indisputable fact that the acquisition of my shareholding in CAPS Manufacturing and CAPS Healthcare can no longer be regarded as binding and that the parties thereto should return to the status quo,” he wrote in a letter to Sekai Nzenza.

“The historical facts are contrary to the narrative you deposed in your affidavit dated December 2, 2021. Once I received a response from the attorney-general after obfuscation…honesty and contrition was what I needed. You will no doubt recall that on 20 February 2020, I wrote to the Reserve Bank canceling the sale and purchase of shares agreement,” the businessman said.

Efforts to get government’s response to the new offer were fruitless as both Nzenza and Chiduwa’s phones were unreachable.

The government has been struggling with its finances and may take long to settle.