adminThe furniture company is planning to delist from the ZSE, to circumvent capital challenges arising from sovereign risk, to be acquired by TN Harlequin International Limited, incorporated in Mauritius.
“No new shareholder is being introduced into Lifestyle and clearly Secz’s pronouncement that the transaction is not being carried out at arm’s length basis is unfounded,” Lifestyle said in a letter to SECZ.
But Secz has filed an urgent chamber application at the High Court, seeking an order to have Lifestyle Holdings’ Extraordinary General Meeting, scheduled for today to consider the delisting proposal, suspended. Secz wants its reservations addressed before the delisting.
Lifestyle Holdings EGM and scheme meeting will now depend on the outcome of the High Court application by Secz. Its concerns include the use of TN Financial Services and Mtetwa and Nyambirai as independent financial and legal advisors of the proposed transaction.
“Applicant objected to the involvement of these advisors on account of their conflict of interest which is likely to prejudice minority shareholders at the meeting of the committee of second respondent,” said Secz.
But Lifestyle said there was no conflict of interest between TN Financial Services, Mtetwa and Nyambirai Legal Practioners and major shareholders. It said the two firms contracted by the firm were reputable, qualified and had interest aligned to Lifestyle Holdings. Furthermore, the furniture group said the contracted law firm, owned by Lifestyle directors Mr Tawanda Nyambirai and Beatrice Mtetwa, was not conflicted as its role was only to make an application to the High Court for permission for the company to convene the scheme meeting.
Secz has also raised concern that controlling shareholders allegedly want to use their influence to steamroll their proposals at today’s AGM to see through a transaction that could prejudice minorities.
“The controlling shareholder, his associates and all persons acting in concert with them, are not entitled to vote,” SECZ said in its supporting affidavit.
The commission asserts that majority shareholders should not vote, but alleges Lifestyle has not communicated this clearly in the scheme document.
Secz also expressed reservations that a trust account to hold funds to pay minorities who will not take up shares in TN Harlequin International has not been set up prior to approval of the transaction.
Further, Secz alleges that Lifestyle has not fully disclosed, in the scheme document schedule, that it would seek ZSE’s approval to delist if the directors’ proposal is approved by shareholders at today’s EGM.
Lifestyle last month wrote a scathing letter to Secz chief executive Mr Tafadzwa Chinamo, refuting the commission’s claims of impropriety.
Lifestyle chief executive Mr Tawanda Nyambirai claimed there was no impropriety in the structure of its scheme of arrangement and contended that the Secz views were informed by lack of understanding of the issues.
“Lifestyle shall proceed with the EGM and scheme meeting scheduled for the 15th of March 2013 of which lawful notice to shareholders has been provided in terms of the Companies Act,” he said.
“Lifestyle dismisses the assertion that the transaction is being carried out primarily to fulfill the interests of the few significant shareholders with the contempt that it deserves.”
Mr Nyambirai also dismissed Secz’s assertion that the participation of the companies in which some of the Lifestyle directors were shareholders made the transaction related part transaction.
“This position betrays Mr Tafadzwa Chinamo’s limited knowledge of the listing rules,” he said. “This limited knowledge perhaps misinformed Secz’s position on the matter.
Online Reporter