Financial Gazette (Harare)
Dumisani Ndlela
27 August 2009
Harare — TA Holdings Limited has secured control of the country's largest construction materials giant, PG Industries, after sealing a deal for the acquisition of a significant stake in the group.
Sources indicated that the deal involved a block of shares accounting for 38 percent of PG's issued shares.
These were held by a management consortium and their bankers, BancABC, a regional financial institution with a primary listing in Botswana and a secondary listing on the Zimbabwe Stock Exchange (ZSE).
Media reports have previously said the management consortium, led by PG chief executive officer (CEO), Nyasha Zhou, had defaulted on a loan repayment to BancABC, previously called African Banking Corporation, which they had used to acquire a 26,27 percent stake from the South African-based Lubner Family in 2001.
TA had then offered to redeem the consortium's debt in exchange for their shareholding in PG.
The consortium's members had a fall-out in 2004, which resulted in a palace coup that toppled former PG CEO, Gerald Mujaji, and resulted in the ascension of Zhou to the helm of the group.
The consortium's key members were Zhou, Mujaji and former PG financial director, Chris Maswi.
Maswi left the group in 2005 following the departure of Mujaji to pave way for a restructuring of the group by Zhou.
Mujaji, Maswi and Zhou together held the 26,27 percent stake through Laserson Investme-nts.
The 38 percent block, through which TA made its acquisition,consists of the Laserson shares as well as those held by BancABC.
"The deal is done," an executive who closely followed the negotiations told The Financial Gazette. "TA came in after difficulties by original shareholders and their bankers. Both saw TA as a good partner to help find a fair resolution to their dispute," said the executive, who cannot be named because he is not authorised to speak on behalf of the parties to the transaction.
Another industry source confirmed the entry of TA into PG, saying Zimbabwe's well-run investment corporation was now "the driving organisation in PG".
"The deal happened above the shares," said the source. "TA's shareholding in the block keeps moving. It is also now the driving organisation in the block," the source said.
The fact that the transaction was done above the shares means that TA did not require regulatory approvals for the transaction to go through. But an announcement was likely to be made at an analysts briefing expected to be held today by TA's executive chairman, Shingai Mutasa, and his close lieutenants at the group.
The Financial Gazette revealed early this month that the cash-rich investment corporation, which shed off its conglomerate structure after Mutasa took it over more than a decade ago, was within the cusp of snatching a controlling stake in PG after the appointment of three of TA directors -- Don McDevitt, Pride Masamba and Bothwell Nyajeka -- to the PG board.
The three were invited into the PG board on July 1 to fill in vacancies that had arisen on the PG board, and will seek formal re-election from shareholders at an annual general meeting scheduled for today.
Sources had indicated then that the transaction was unique and TA was therefore trying to agree terms that would appease all parties in the transaction, an analyst with a local investment house said.
Mutasa was said to be in meetings when contacted for a comment yesterday.
But in an exclusive interview with this paper two years ago, McDevitt, who's in charge of operations, had indicated that the group was "now ready to grow" and preparing for major acquisitions due to its competence in cash management which Nyajeka, the finance director, said had given the group "the buffer and security to move . . . and look at opportunities".
TA has issued cautionary statements over pending acquisitions in at least three African countries.
A source familiar with the group's funding said TA was using a combination of debt and cash in its expansion drive.
"It's the cash that's giving them confidence. Mutasa is trying to build something and he is driven by a strong desire to succeed. He is still far from where he wants TA to be," said the source. It is expected that his team will bring dexterity to the management of cash at PG.
Under Mujaji's reign, PG became mired in huge debts, triggering a dismal performance by a group that had been counted among blue chip counters on the ZSE. Zhou's take-over had been supported by a number of key shareholders and bankers, including the Merchant Bank of Central Africa, mainly owned by an institutional investor, Old Mutual, and South Africa's Nedbank. His mandate was to drive the group from its high gearing.
Under Mujaji, the group had initially completely wiped off its huge debts under a restructuring exercise in which PG had disposed of its major properties in the capital.
Mujaji was to later sell a controlling stake in PG's key manufacturing subsidiary, Zimboard Products, to a Mauritian company, PG Bison, to help alleviate a resurgent debt problem on the group's books.
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