Econet Zim to raise $130m for loan repayments

20 Jan, 2017 - 00:01 0 Views
Econet Zim to raise $130m for loan repayments

The ManicaPost

Listed telecoms firm Econet Wireless Zimbabwe has announced plans to raise $130 million through a rights offer and linked debentures. The company says it intends to use the funds to repay outstanding loans from foreign lenders.

Econet owes $128,2 million to China Development Bank ($88,3 million), the Africa Export and Import Bank ($18,7 million), Ericsson Credit AB ($15,2 million) and the Industrial Development Corporation ($6 million).

“In recent months it has become clear that there is a critical shortage of foreign currency in the overseas nostro accounts of Zimbabwe’s banks, and that the amount of  local USD cash that those banks can export to fund their nostro accounts has diminished materially.

“This has made it extremely difficult for the company and its subsidiaries to service their financial obligations to lenders and creditors outside Zimbabwe. To avoid defaulting on its loan obligations, the company intends to raise foreign currency from its members by way of a rights offer of shares and linked debentures,” said chairman Dr James Myers in a circular to shareholders today.

In respect of the terms of the rights offer, Econet said shareholders shall be offered, pro-rata to their shareholdings, 1 082 088 944 ordinary shares plus 263 050 614 Class A shares at a subscription price of 5 US cents each on the basis of circa 82 ordinary shares for every 100 shares already held.

It added that each share shall be linked to a redeemable debenture with an issue price of 4 665 US cents each, a coupon rate of 5 percent per annum payable upon redemption, and a redemption value of 6 252 US cents each inclusive of the cumulative interest coupon for the 6 year period, and that the subscription price for the shares and the debentures shall be payable in full on acceptance of the offer.

“Each class of shareholders will be entitled to follow their rights and contribute the capital required pro-rata to their existing shareholding in Econet Wireless. If a shareholder decides not to follow their rights, the rights offer shall be renounceable in terms of ZSE listings requirements only in favour of an existing shareholder with capacity to take up the rights offer shares and the Linked Debentures,” reads part of the circular.

The rights offer is being underwritten by parent company, Econet Global Limited.

And in terms of the linked debenture offer, the company said each debenture shall be linked to a rights offer share on a ratio of 1:1. Each debenture shall have an issue price of 4 665 US cents, a coupon rate of 5 percent per annum payable upon redemption, and a redemption value of 6 252 US Cents inclusive of the accumulated interest, and shall be redeemable after 6 years or earlier as determined by the company at its absolute discretion.

Econet said the linked debentures shall be issued on an accrual basis, with no periodic payments of interest but carry embedded value which is realisable upon maturity, and that it shall not be possible to subscribe for rights offer shares alone without subscribing for the debentures nor shall it be possible to subscribe for the debentures alone without subscribing for the rights offer shares.

The company has set an Extraordinary General Meeting for February 3, 2017 where shareholders are expected to approve the proposed capital raise. Once approved, the offer opens on February 20 and closes on March 10. – BH24.

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