Econet to hold EGM to approve rights issue

Herald Correspondent

Econet Wireless Zimbabwe Limited, the country’s largest mobile telecommunications and technology company, will hold an extraordinary general meeting (EGM) on 7 August 2023 to approve a US$30 million rights issue.

The rights issue will see Econet offer existing shareholders the opportunity to subscribe for new shares at a discounted price. The proceeds of the rights issue, which will open on 21 August 2023 and close on 8 September 2023, will be used to repay Econet’s debenture holders.

In a circular to shareholders on Monday, Econet said shareholders will meet virtually on August 7, 2023 to hold an EGM. The EGM will consider and pass a resolution authorising the company’s directors to offer renounceable rights offer shares in the ratio of 17.122 new shares for every 100 shares already held in the company at the close of business on 18 August 2023 of an aggregate of 401,586,371 ordinary shares. These will be offered at a nominal value of ZWL0.001 each in the company’s authorised share capital to existing holders of the company’s ordinary shares.

This will be done for subscription “pro-rata” to their existing shareholdings, in United States Dollars at a price of US$0.0755 each payable in full, with an option to pay in the form of EWZL debentures at a price of US$0.06252 per each debenture, and to issue and allot such shares as may be subscribed to pursuant to the rights offer to such shareholders.

According to the circular, shareholders will also be required to approve that the rights on offer may only be renounced in favour of existing shareholders of the company.

In addition, shareholders are expected to validate that the options available to them are to follow their rights in United States Dollars, or to pay the consideration for the rights offer shares in Econet Debentures at a price of US$0.06252 per debenture.

The EGM comes after the leading telecommunications, technology and digital solutions firm has received an undertaking from existing shareholders representing 50% of the issued shares to follow their rights in full and the company has an underwriting agreement with TN Asset Management to subscribe for any shares that have not been subscribed for by existing shareholders.

The undertakings to follow rights and underwriting commitments have guaranteed that US$30.3 million will be raised.

Earlier this year, Econet indicated that it does not have adequate resources to meet the debentures’ maturity. To avoid defaulting on its debenture obligations that are in hard currency and were due in April of this year, the company sought recourse to raise foreign currency amounting to US$30,319,771 from its members by way of a rights offer of shares with an option for shareholders to use its debentures as a currency to subscribe.

“The company cannot accept local currency payments as these debenture payments are in hard currency with 90% required to be made to external debenture holders,” Econet said in an earlier notice to shareholders.