13 January 2013

Zimbabwe: TN Bank-Econet Deal to Benefit Minorities - Nyambirai

Kudzai Chimhangwa — MINORITY shareholders in TN Bank, mostly former Tedco shareholders, are set to reap rewards from the Econet takeover of the financial institution, bank founder Tawanda Nyambirai said last week.

Speaking to Standardbusiness last week, Nyambirai quashed market reports that the Econet acquisition of TN Bank and its de-listing from the stock exchange was only in the best interests of the main shareholder. The reports said the takeover would negatively affect minority shareholders.

Nyambirai said the last time he assessed the minority shareholders' attitude towards the acquisition of the bank by Econet was at an extraordinary general meeting (EGM) in June 2012.

"At that EGM, the shareholders, including minority shareholders, voted in favour of the transaction 100%," he said. "All our minority shareholders without dissent welcomed Econet and saw the value that I saw Econet bringing on board."

Nyambirai said that the rationale behind the transaction was premised on the shareholders' realisation of the inevitable integration of telecommunications with banking.

Under the transaction, TN Bank minority shareholders will be offered Econet shares in exchange for stakes in the bank.

The bank's management felt that engagement with potential investors would likely add value to the company as the current trading price on the bourse undervalues it.

The company's share price has plummeted by 50% from its listing price of 32,08 US cents in June last year. It is trading below its net asset value (NAV) of US$0,25c per share.

TN will de-list from the Zimbabwe Stock Exchange (ZSE) should the deal sail through.

"As much as they know that TN Bank is undervalued, they know that Econet is much more undervalued than any other counter on the ZSE," said Nyambirai. "I do not see any TN Bank minority shareholders who will fail to find the transaction attractive."

TN Bank said that it needed to raise capital to meet the central bank's minimum regulatory capital requirements of US$100 million by December 31 next year. After the de-listing exercise, shareholders would continue trading shares on a willing-buyer, willing-seller basis.

Market analysts felt the procedural action would have been to offer minorities a price preferably at a premium to the trading price.

They argue that since up to 83% of TN Bank's issued share capital was held by Econet and numerous trust vehicles, the majority shareholders could railroad resolutions through that best suit them. TN Bank is trading at a discount of around 36% to its net asset value of US$0,25c per share, a reflection of its low trading volumes.

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