21 September 2012

Zimbabwe: Chidawu Booted Out of Pelhams Board

BUSINESSMAN Oliver Chidawu's last minute bid to stay on the board of Pelhams Ltd failed after he was booted out by shareholders at an annual general meeting on Wednesday.

Chidawu, who lost majority control of the listed furniture retailer after businessman Jayesh Shah sold a 36% shareholding he had ceded to him as collateral for a US$3 million loan, had offered himself for re-election as a director of the company.

Tawanda Nyambirai's investment vehicles, which bought the shares from Shah, stopped the bid as they now control about 56% of the company.

Nyambirai consolidated his stake when he bought the 20% stake that belonged to Godfrey Gomwe last year.

Last Friday, 116,3 million shares went through as a special bargain on the Zimbabwe Stock Exchange with Chidawu boosting his shareholding in anticipation of a favourable ruling in a case which had been lodged by Nyambirai over the right to use the contested 36% shareholding during voting in the AGM.

The shares, which were held under LES nominees but belonged to Benjamin Balneves, who owns Tradewinds, were under Borfin Investments.

Balneves was due to be elected director of the company but withdrew his nomination at the last minute. No reasons were given for the withdrawal.

Balneves is said to have gotten into an arrangement with the company after he sold them the manufacturing business and was offered the shares instead of cash.

The 116,3 million shares accounting for 11% of the group's total issued share capital, took Chidawu's stake to around 18%.

Nyambirai made an application at the High Court after Chidawu attempted to stop the shares from being used at the AGM on the basis the assets were in dispute.

The High Court ruled in favour of Nyambirai.

Chidawu, who also lost another bid in June at the Supreme Court to block the transfer of shares to Nyambirai, was absent at the AGM.

Had the High Court ruled against Nyambirai, there would have been little difference separating the vote as 36% would not vote for the resolutions to elect the team from Nyambirai.

Chidawu's 18,69% shows in the vote for his re-election which was 63,15% against while 18,15% abstained.

Chidawu is said to now hold around 18% of the furniture company.

Both Chidawu and another shareholder believed to be Old Mutual abstained from the resolutions except one where Chidawu is said to have voted for the election of Liberty Razunguzwa to the board.

Contacted for comment Chidawu, this week said he had no knowledge of the transaction, claiming he did not know who the stockbroker who handled the deal was.

However at the AGM, Chidawu's proxy Simba Mupandanyama voted using the investment vehicles held by his handler including LES nominees.

In the absence of Chidawu, CEO Oswald Masoha was appointed chairman of the meeting after TN Asset Management invoked article 66 of the Articles of Association, which called for a vote.

Mupandanyama had been nominated to be chair but Nyambirai contested, saying he could not stand as chairman as he was up for removal. Mupandanyama was removed from the board after 63% voted for his removal while 36% abstained.

All the TN nominees -- Rugare Chidembo, Nyambirai, Alexander Gonese, Charity Chanetsa and Winston Makamure -- were voted in with the same 63% vote for and the 36% abstention.

In a trading update, chief operating officer Isaiah Mukudu said turnover in the three months to June was down 16% to US$2,5 million as the company was unable to access meaningful credit to fund the debtors book.

Credit sales amounted to 68% compared with 77% at year end. Due to the lack of funding, sales on 12 month credit amounted to 6%, with the overall debtors' book down 10% at US$9,4 million when compared with the past financial year.

Mukudu said margins were tight, with the gross profit margin falling to 22,18% in the quarter from 30,01% last year. As a result of promotions and discounts, cash made up 32% of sales compared with 32% last year.

Unit sales fell to 3 561 from 3 856.

Although branches were not adequately stocked, especially high end outlets, no branches were closed in the period. Mukudu said it was imperative the group was recapitalised sooner rather than later.

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