admindebt equity swap at an extraordinary meeting scheduled for next month.
The banks’ decision to seek equity in the mining group came after RioZim’s loans failed to perform, forcing banks to roll over the debts. Last week, in a statement to shareholders, the group said it would issue 43,9 million new ordinary shares at a price of US66c per share to lenders owed about US$29 million.
The arrangement is set to cover selected lenders after some of the banks owed by the mining firm objected to the deal.
Old Mutual, the second biggest shareholder, with 19 percent control of the company, was said to be in favour of the debt equity swap deal only if the conversion was fair.
Calculations indicate that RioZim will have almost 140,4 million shares of which 43,9 million shares representing 31 percent would be controlled by the banks. BancABC, understood to have advanced US$3 million to RioZim, leads the debt restructuring team.
It is understood the banks were owed above US$40 million by the mining group. Remaining lenders are likely to be paid from the proposed rights issue or from the sale of metal stocks.
RioZim is seeking shareholders’ approval to issue 66,6 million shares to raise about US$30 million, the biggest fund-raising initiative on the Zimbabwe Stock Exchange since dollarisation.
This would effectively reduce the debt burden on the company and inject new capital for the business to exploit its mineral resources base and benefit from the metal prices on the global market.
Trust Banking Corporation is said to have advanced US$3,4 million to RioZim and Tetrad’s string of loan facilities amounted to US$4,8 million.
Some of the banks included Kingdom Bank, ZB Bank and Premier Banking Corporation now Eco Bank Zimbabwe. Others include the Infrastructure Development Bank of Zimbabwe, Metropolitan Bank,
Imara Corporate Finance, Renaissance Merchant Bank and the African Export and Import Bank.
RioZim’s problems worsened when Indian firm, Essar, pulled the plug on a deal to invest in the company, after a due diligence of exercise revealed that the company was debt-ridden. By then RioZim wanted to raise US$40 million through a rights issue, which Essar was prepared to underwrite. Initially, the group wanted to raise US$60 million but faced problems to secure an underwriter.
RioZim is also seeking shareholder approval to raise US$30 million through a rights offer of 66,6 million shares of a nominal value of US0,1c.
Company directors are also seeking shareholder approval to place the balance of the unissued ordinary shares under the control of directors.
RioZim traded at US50c on ZSE yesterday.
Online Reporter