eBusiness Weekly
Business Writer
Zimbabwe Stock Exchange-listed firms Econet and EcoCash Holdings have announced plans to raise US$30,3 million each to pay off outstanding debentures in the capital of the two firms.
The debentures stem from a US$128 million capital raise exercise in 2017, about half of which were debentures, as the company sought to mobilise the foreign currency needed to settle external loans. The then Econet Group issued 1 166 906 618 unsecured redeemable debentures with a 5 percent annual compounding coupon rate and a six-year duration. The subscription price was 4,665 US cents per debenture with redeemed debentures paying interest.
However, in 2021, both Econet and EcoCash called for early redemption of the debentures at the interbank rate but only 22,46 percent debentures were offered for early redemption by the holders. This left the firms with an obligation for 904 778 710 debentures each which are redeemable at the end of this month at a price of 6,252 US cents per debenture.
To pay off the debts, Econet and Ecocash yesterday issued separate cautionary statements advising that their Board of Directors are considering proposals to call for Extra Ordinary General Meetings of Members for the purpose of considering a renounceable rights issue of new ordinary shares in the capital of the firms to raise approximately US$30.3 million each.
The amount is “required to redeem the outstanding Debentures in the Capital of the Company”, reads part of the separate cautionary statements.
“Accordingly, shareholders and the investing public are advised to exercise caution when trading in the Company’s securities until such time as the full details of the proposed rights issue are published.”
If the resolutions are passed at the EGMs, then it would be the first time firms trading on a ZWL-denominated stock exchange have issued shares in US dollars. The Zimbabwe Stock Exchange trades in ZWL but some listed firms have been paying US dollar dividends making the capital raise a possibility.
Market analyst Walter Mandeya of Trigrams Investments said shareholders would need to be given more information and maybe more time to raise the required amounts. “I think if shareholders accept the proposal it is going to be difficult for the ZSE to block the rights issue. If the economy is trading 70 percent in USD how will the ZSE stop shareholders who agree to raise capital in USD, but continue to be listed on the ZSE in ZWL?, said Mandeya.
“We do need to see the circular though on how they assist shareholders without access to USD.”
