16 January 2013

Zimbabwe: Russians Raise Stakes in Race for Turnall With U.S.$35 Million Bid

A RUSSIAN resources firm has waded into the race for the acquisition of asbestos products manufacturer, Turnall Holdings Limited, raising the stakes in a bid that could see potential suitors recalibrating their proposals.

This emerged as FBC Holdings Limited, the banking group that is at the centre of the planned sell, denied reports by this newspaper last week that a Swiss-based firm was within the cusp of clinching a deal giving it control of Turnall. An FBC Holdings spokesperson said the Swiss consortium, which includes a local company, had only expressed interest in the company with no valuation having yet been agreed.

The Russians, said to have roped in the Zimbabwe Mining Development Corporation (ZMDC), are said to be offering a cool US$35 million for a controlling stake, against a US$13,5 million bid by a Swiss firm reported by The Financial Gazette's Companies & Markets (C&M) last week.

A spokesperson for FBC Holdings said they had received bids from several interested parties but were "currently engaged in serious discussions with a local bidder". The spokesperson declined to reveal the name of bidders, citing confidentiality.

"FBC Holdings has been flighting cautionary statements since November last year," she told C&M, denying that they had reached a deal for Swiss private equity firm Zurmont, which had partnered with a United Arab Emirates investment firm called Augan Investments, and a local company called Ryan Capital, to buy FBC's stake in Turnall.

She, however, did not deny the Swiss had bid for Turnall, saying: "As part of its efforts to meet capitalisation requirements set by the Reserve Bank of Zimbabwe (RBZ), FBC Holdings has indicated that it plans to dispose of its 59 percent stake in Turnall Holdings. It has been involved in discussions with several interested parties over the past few months with favourable indications."

It has now emerged that FBC Holdings's own valuation of Turnall puts it at US$100 million, against the current market capitalisation of US$25 884 616.

The Turnall share is tightly held with the top three shareholders holding over 85 percent of the issued share capital, leaving a free float of under 15 percent.

FBC Holdings took majority control of Turnall after its banking unit, FBC Bank, converted a US$8 million debt owed by Shabanie Mashava Mine (SMM) to the Africa Export and Import Bank into equity. FBC Bank subsequently transferred its stake to FBC Holdings, as RBZ regulations forbid extended holdings in non-core businesses by banks. SMM was the former controlling shareholder in Turnall and had pledged the shares, translating to more than 50 percent equity in the company, as collateral for the loan.

Turnall's first ever share price in the multi-currency regime was 1,5 United States cents in March 2009.

The counter went to register a 1 000 percent rise to reach a peak of US$0,15 in July 2011, before receding.

The counter has an average price of 5,83 US cents for much of last year. It closed the year 2012 at 5,5 US cents, a price which is way below the company's true value, which market analysts also estimate to be around US$100 million.

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