via Trust Bank’s recap hangs in the balance | The Herald November 26, 2013 by Martin Kadzere
THE recapitalisation of Trust Bank is hanging in the balance amid revelations that its potential investor, Mining Oil and Gas Service, a South African-based firm will only inject money into the bank on condition it obtains an approval from Government to construct a fuel pipeline linking Beira and three southern African countries through Zimbabwe.
MOGS offered to inject US$20 million in Trust Bank in exchange for a significant shareholding. MOGS, a Black Economic Empowerment accredited company focuses on providing mining, oil and gas products and services to industries in South Africa and the region.
Sources said the investment into Trust Bank was dependent upon the condition that MOGS gets Government approval for its proposed oil pipeline project as it intends to transform Trust Bank into an energy bank that would also be handling its finances.
“MOGS has dictated the condition to Trust Holdings Ltd shareholders,” said one source.
“They (MOGS) are not very interested in banking but what has motivated them to consider an investment into a local bank is the amount of money they intend to invest. They need to have a controlling stake in a bank that would manage its finances.
“But this will only happen after obtaining an approval to construct a pipeline from the Government.”
If approvals are obtained, the construction of the section between Harare and Beira, is expected to cost US$1 billion and is estimated to take between 18 and 24 months. MOGS is also seeking approvals to use Zimbabwe’s fuel handling facilities in Msasa.
The proposed pipeline will start in Beira and run through Harare and Bulawayo. From Bulawayo, it will run south-west to Botswana and run north through Zambia to the DRC. MOGS has already been given access in Mozambique and the firm is now seeking approval to construct the facility through Zimbabwe.
The proposed pipeline will run parallel with the Feruka Oil pipeline linking Beira and Msasa fuel depot in Harare and will have capacity to move 500 million litres of fuel per month.
Energy and Power Development Minister Dzikamai Mavhaire said many investors had proposed to construct a second pipeline and his ministry was looking into the proposals.
“We have received a number of proposals and the ministry is looking into them,” said Minister Mavhaire.
Trust Holdings Ltd chief executive Mr William Nyemba told this paper recently that while several regulatory approvals were required for the injection of fresh capital into the bank, the group has already secured endorsement from 60 percent of key shareholders.
MOGS will ensure bank regulatory capital compliance, improve bank liquidity, give the current shareholders premium for their shares plus US$6 million net assets. The core capital of Trust Bank after capital injection will increase to US$24,1 million from US$4,1 million.
MOGS will be responsible for ensuring profitability and future capitalisation of bank.
THL once engaged Norwegian equity investor, Norfund for funding but the deal fell through with the investor eventually settling for NMBZ.