RioZim gets approval for Zamco deal

LISTED RioZim Limited’s shareholders have approved a proposal to have the Zimbabwe Asset Management Company (Zamco) acquire some of its short-term debt of nearly $34 million.

The move is expected to lower RioZim’s finance costs by half thereby creating fiscal space for the struggling resources group.

In the three years to June last year, RioZim paid $36,3 million in interest charges but only reduced its core debt from $58 million to $43,1 million.

Interest rates charges on the debt have averaged over 21 percent but are set to come down to nine percent following the transaction with Zamco, a special purpose vehicle set up by the government to purchase non-performing loans from banks and clean their balance sheets.

According to an online publication, The Source, RioZim’s shareholders, who met at an extraordinary meeting in the capital recently, allowed the group to convert 10 million of its unissued authorised ordinary shares into cumulative redeemable preference shares of $0,01 each.

“Shareholders also allowed us to convert 10 million of our unissued authorised ordinary shares into 10 million unissued authorised cumulative redeemable preference shares of $0,01 (each to be issued to Zamco at a premium of $3,36721 per share on terms and conditions contained in the memorandum of agreement,” RioZim chief executive Noah Matimba was quoted as saying.

Zamco will acquire RioZim’s non-performing loans in exchange for preference shares for a five-year period.

The shares would have a coupon rate of nine percent per annum payable bi-annually.

In turn, Zamco will have one seat on RioZim’s board of directors as long as the preference shares remain unredeemed.

However, the member will not have voting rights.

Matimba told journalists on the sidelines of the extra general meeting that the latest development would see the resources company focusing on growth.

“We’re pleased that our shareholders have supported us and our strategy going forward is to survive by reducing costs and operating efficiently,” he said.

For the six months to June 30, 2015, RioZim reported a net loss of $7 million, compared to a $7,5 million loss recorded over the same period in the prior year.

The group’s revenue declined to $23,1 million from $39,4 million recorded over the same period in the prior year. —The Source.