AfrAsia Kingdom release recapitalisation circular

Published: 20 November 2013

AfrAsia Kingdom released a circular relating to its proposed recapitalisation by up to $100m through a Rights Offer and a Private Placement.

An EGM of the company shall be at 100hrs on Friday 29 November 2013 at Royal Harare Golf Club. The special resolutions tabled include the increase in share capital, share consolidation (10 for 1) as well as change in mane and rebranding.

The increase in the minimum capital requirements for commercial banks in Zimbabwe ($100.0m) coupled with changes on the capital account due to provisioning arising from non-performing loans has necessitated the injection of additional capital. Additional capital will strengthen Kingdom Bank Limited's capacity to underwrite additional business and maintain its market share.

The extra capital will also allow the Company to implement the Crustmoon share buyback. The Reserve Bank of Zimbabwe now requires all banking institutions to migrate to Basel 2, which requires a substantial capital base to absorb any potential shocks from non-performing assets. Consequently the recapitalisation of KBL in crucial and shareholders' approval is therefore sought to implement the transaction.

The recapitalisation of Afrasia Kingdom Zimbabwe Limited will be by way of injection of up to $100m. The company wishes to raise the capital through a fully underwritten rights offer in the amount of $5.0m and a private placement of up to $95m. The transaction will be implemented in several phases.

Phase 1 is the rights offer that seeks to raise $5.0m together with the first phase of the private placement programme, where the company will seek to raise $15.0m at a subscription price of $0.03553 per share. Any shares not taken up by shareholders under the rights offer will be taken up by the underwriter. Although shareholders will be advised and entitled to participate in each of the phases of the private placement, they may approach the company whenever they wish to purchase shares. A total of $20.0m will be raised in Phase 1.

In terms of the Rights Offer, 140,726,147 shares are offered to shareholders registered on 27 November 2013 at a subscription price of $0.03553 per share at a ratio of 0.21 shares for every one AKZL share held. The Rights Offer opens at 0800hrs on Monday 2 December 2013 and closes at 1600hrs on Monday 30 December 2013.

As part of the transaction, the management wish to broaden the prospects of strengthening the company's financial position by offering potential investors preference shares. Subject to shareholders' approval the issue of preference shares will complement without increasing the targeted amount to be raised.
- businessdaily