Business Editor
Self-exiled businessman Mr Mutumwa Mawere has criticised the taking over of the majority stake in Zimre Holdings by a consortium led by Mr Simon Rudlands saying it reverses the gains of empowerment which have been made since Independence.
Mr Mawere, who is a former shareholder in Zimre said the new shareholding structure in the company undermines the shared vision of creating an environment in which economic freedom for all reigns and it was troubling because it comes against a backdrop where President Mugabe is concerned about the role of black people in the economy.
According to a report first published by a local financial information email service and reproduced by a local weekly, a consortium led by the Rudlands (Simon and Hamish) underwrote the Zimre $15 million rights issue and subsequently took control of the group after the major shareholders (Government and NSSA) failed to follow their rights.
The 40,1 percent stake is currently housed under NMB nominees. Government now has a 22 percent stake and NSSA is on 19 percent.
Only 18,03 percent of shareholders followed their rights of the 750 million shares which were offered. As a result 614 million shares representing 81,97 percent of the shares were issued to the underwriter. The shares were issued on the basis of one share for every 1 041 ordinary shares held.
The report says that the Rudlands who are the majority shareholders in Unifreight and also own a significant stake in TSL coupled with interests in the dairy sector among other businesses — are more interested in CFI Holdings than the core business of insurance. ZHL is the majority shareholder in the agro-focused company.
It is not yet clear if an offer for minorities is going to be made as the shareholding has passed the mandatory 35 percent required for a takeover.
Mr Mawere is a former majority shareholder in Zimre through Endurite and UKI subsidiaries of UK registered THZ. He was also majority shareholder in SMM Holdings which housed Turnall Holdings, General Beltings and Steelnet. He lost his shareholding in Zimre after failing to follow his rights in a right issue floated by the company in 2006. Zimre was considered to be under reconstruction by virtue of its previous transactions with SMM.
In August 2006, then Justice Minister Patrick Chinamasa, declared Endurite and UKI to be specified persons in terms of Section 6 of the Prevention of Corruption Act (Chapter 9:16). Endurite and UKI held 24,23 and 22,23 percent, respectively, in the ZSE listed investment company.
In January 2005, Zimre Holdings held an extraordinary general meeting to consider a rights offer for the company. Two resolutions were to be approved and these were increase of share capital and for the rights issue.
THZ sought and lost an order declaring the passing of the resolutions invalid on the basis that the proxy that voted against the proposed resolutions was not allowed to act on behalf of specified persons.
The Prevention of Corruption Act says that a specified person cannot act as a director of a company or a partner in partnership or in any manner conduct or manage the affairs of a company or do the same for specified entities without the approval of the investigator of the person involved.
Mr Mawere said his understanding was that if Government used public funds to gain control of the company, ZHL should then have remained under its control.
“Recognising that more than 51 percent of Zimre’s shareholding was under the control of myself, a black person, the administrator, Mr (Afaras) Gwaradzimba, with the full support of the Government and the Reserve Bank of Zimbabwe caused a rights issue to be motivated whose aim was to reverse the control of Zimre.
“However in using public funds to gain control, one was entitled to assume that a decision was made then that Zimre was a strategic asset that should have remained under the control of the state.”
According to analysts, the $15 million capital raised was not enough to warrant Government’s loss of half its stake but it’s agreed that it does not have the resources at the moment to follow their rights.