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Business Reporter
A deal to acquire former AfrAsia Financial Holdings subsidiary, MicroKing by foreign investors, has reportedly collapsed after revelations that the Deposit Protection Corporation shifted goal posts on the purchase price.
The deal would have seen a consortium of European investors MicroCred and AfricInvest acquire the micro-lender on an initial investment of $25 million.
An impeccable source told The Herald Business on Friday that DPC sought to alter the terms of the agreement at the last minute.
“Representatives of MicroCred and AfricInvest were in the country last month where they showed willingness to invest in the company. However, when a deal was agreed on, DPC started shifting goal posts. The biggest challenge to the negotiations was lack of transparency on the side of DPC. The collapse of the deal has riled the employees who have been surviving on a 40 percent salary since September this year,” said the source.
In a letter to Finance and Economic Development Minister Patrick Chinamasa exclusively made available to The Herald Business, MicroKing employees alleged that there has been lack of transparency in the company’s takeover negotiations.
“According to industry standards and best practices, if an organisation is on sale or is looking for an investor, it is prudent to have audited financial statements as these help show the real value of the organisation.
“We thought an audit had been conducted by Price Waterhouse Coopers, given that the auditors were on site for over two months doing the June financials. We have noted with concern that the process was not concluded meaning that there are no audited financials.”
“The investor was then asked to conduct their own audit as at June 30 this year and from the audit the investor came up with their fair value of the organisation which they proposed to the liquidator in their offer letter as per the bid which they submitted,” said the employees.
The employees said negotiations commenced in November and deliberations were made and a provisional agreement was reached after the investor has topped up more money on their original offer.
After a couple of days before the actual signing of the purchase agreement DPC changed goal posts and requested for more money again which the investor received with shock as DPC did not have a rational basis for the demand.
“We have been advised that the investor had asked the liquidator for a final decision to be out by close of business November 25, 2015 as this was now taking too long. At the close of the said day there was no response from DPC and the investor left the country for Paris and there has been no communication since then,” said the employees.
The employees implored Minister Chinamasa to intervene as continued operations of the business without an investor was tantamount to loss of its value.
The letter said the collapse of the deal defeats the purpose of the national agenda laid out in the Zimbabwe Agenda for Sustainable Socio-Economic Transformation and the 10 point plan.
Efforts to get comment from DPC CEO John Chikura were fruitless as his mobile phone went unanswered.
Online Reporter