Shareholders endorse Nigel Chanakira's exit

Published: 01 December 2013

Shareholders in AfrAsia Kingdom Zimbabwe Limited (AKZL), the parent company of Kingdom Bank, on Friday voted for the repurchase of shares indirectly held by an investment vehicle linked to Nigel Chanakira, ending his association with the banking group.

At an incident-filled extraordinary meeting of shareholders, the company was given the nod to repurchase 289 133 648 shares indirectly held by Crustmoon for $12,5 million.

The company will pay $2,5 million with the balance via an indirect cession of certain claims against loan debtors and related security assets held by Kingdom Bank and the Kingdom Trademark.

This did not go down well with some majority shareholders who equated the transaction to giving a golden handshake to Chanakira at a time the company was in a financial mess. Shareholders also wanted to know the value of the Kingdom Trademark.

Lynn Mukonoweshuro, AKZL group chief executive officer, told the meeting that no value had been placed on the trademark and that it had been associated with Chanakira.

She said the buyback of the shares had been necessitated by the urgent need to recapitalise the bank. She said some of the assets to be transferred to Chanakira were non-performing loans where prospects of recovery were nil.

Mukonoweshuro said a number of assets had no security. This riled another shareholder who questioned the move by the bank to enter into transactions without security. The shareholder requested an undertaking that it won't happen again.

Kamben Padayachy, AKZL non-executive director and a representative of AfrAsia Bank Limited (ABL) said the Mauritian headquartered group would ensure that all the credit processes were in place. He said ABL would be fully supportive to ensure that the local operations grow in terms of governance and credit processes.

Shareholders also felt that giving the Kingdom trademark to Chanakira was going to affect the local operations because AfrAsia was not known locally.

Padayachy said the brand would be fully supported locally.

Shareholders also approved the issuance of ordinary and preference shares to raise capital for the bank.

The resolution on the issuance of preference had to be decided by a secret ballot after a request by one of the shareholders, Old Mutual. Old Mutual has 5,6% in AKZL which was inadequate to call for a secret ballot, according to AKLZ's articles of Association.

Two other shareholders supported Old Mutual. After a secret ballot, 93% voted in favour of the issuance of preference shares and the motion carried the day.

AKLZ's recapitalisation plan is designed to raise $100 million as core capital for the Bank.

In the first phase $5 million will be raised through a rights offer and $15 million via a private placement. The group will undertake subsequent phases of private placement to raise $80 million.

Shareholders also approved the name change of AKZL and its subsidiaries - Kingdom Bank and Kingdom Asset Management-to AfrAsia Zimbabwe Holdings, Limited, AfrAsia Bank Zimbabwe Limited, AfrAsia Capital Management respectively.

In 2011, ABL bought 35% in the then Kingdom Financial Holdings Limited. It renamed the group AKZL.

ABL will underwrite the rights offer and has so far provided the bank $10 million to stave off the current liquidity crunch.

In September, Chanakira and his partners agreed to sell their 30% shareholding to AKZL.

- thestandard