Brainworks' Telecel deal reinstated

Published: 07 June 2015

Empowerment Corporation (Private) Limited (EC)'s shareholders have unanimously agreed to restore Brainworks Capital Management (BCM)'s bid for their 40 percent share in Telecel Zimbabwe (Private) Limited (Telecel), businessdaily has learnt.

Patrick Zhuwao, the company's managing director, confirmed the decision, which was taken up at a quiet extraordinary general meeting (EGM) in Harare and after weeks of much infighting, and government threats to the mobile operator's licence.

"I can confirm that steps have been taken to resolve all grievances noted since EC's formation and shareholders appreciate government's apprehension over the company's future, especially with a recalcitrant foreign shareholder on board," he said.

"While there is widespread agreement that the licence is a public asset and, therefore, people need to jealously guard against such things as speculative sales, shareholders have not only expressed their eternal gratitude for this opportunity (Telecel) but also affirmed government's indigenisation programme," Zhuwao said.

Under the new plan, which also seems to suggest that EC's shareholders have finally chosen to close ranks, the ex-deputy minister said the seven founding investors will get a bigger slice of the cake with the Affirmative Action Group, farmers, Jane Mutasa's Indigenous Business Women's Organisation (IBWO), small scale miners and war veterans allocated 12,86 percent each.

On the other hand, James Makamba's Kestrel Corporation and Integrated Engineering Group will get 21 percent, and 14 percent, respectively.

Apart from reinstating the $20 million offer by BCM, Zhuwao said Friday's EGM also resolved to appoint auditors to do EC's books and process will determine how its chairman - and anchor shareholder - will be compensated for "carrying the load of running the company over the years".

The former Zanu PF legislator also said he was hopeful the latest efforts have "put to rest all outstanding issues and squabbles that has rocked the group over the years, and the new investor was needed to fulfil all outstanding obligations" including the licence fees.

In his opposing affidavit to Mutasa's earlier court action, Zhuwao made some startling revelations that Telecel was "technically insolvent" and needed recapitalisation funds to the tune of $300 million.

According to the President Robert Mugabe nephew, the company's audited financials for the year ended December 2013 clearly showed total assets of $216 million against current and non-current liabilities of $203 million, thus leaving a net asset value (Nav) of less than $15 million.

"…the financial position has since then significantly deteriorated to an equity (Nav) position of less than $100 000, by end of 2014," he added.

In an earlier statement, Makamba also seemed to suggest that warring shareholders have buried the hatchet and, therefore, working with one aim or objective to resuscitate the business - which is now Zimbabwe's third largest telecoms operator.

"The reported actions of the government… have had a sobering and introspective effect on all parties involved in EC. It is in the light thereof that EC… has taken the initiative of resolving, finally, all matters afflicting the shareholding of the company," the exiled businessman said.

Makamba's statements came after Information and Communication Technology minister Supa Mandiwanzira had expressed serious dismay over Telecel's failure to pay its $137,5 million licence fee.

The development and truce also comes as High Court judge David Mangota has dismissed Mutasa, her Selpon Investments (Private) Limited and Magamba Echimurenga's urgent chamber application to stop an earlier EGM and the sale of 80 million Telecel shares to BCM on account of "material disputes of fact", which could only be heard in an open court.
- dailynews

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