29 January 2013

Zimbabwe: NMBZ Courts Foreign Investors

NMBZ Holdings shareholders will meet next month to consider directors' proposal to raise US$14,8 million by issuing 103,7 million ordinary shares to foreign investors to help the firm meet regulatory capital thresholds.

The shareholders will meet on February 19 to consider four resolutions to enable the financial group to place shares with strategic foreign investors.

Private placement is the sale of securities to a relatively small number of select investors as a way of raising capital. Investors involved in private placements are usually large banks, mutual funds,

insurance companies and pension funds. Private placement is the opposite of a public issue, in which securities are made available for sale on the open market.

Banks were required to meet at least 25 percent of the new minimum capital thresholds set by the Reserve Bank of Zimbabwe by December 2012. They should be fully compliant with the new thresholds by June next year.

RBZ Governor Dr Gideon Gono last year said banks with viable capital raising plans would be given time to conclude their recapitalisation initiatives. To that end, NMBZ directors seeks permission to consolidate the group's authorised share from 3,5 billion ordinary shares valued at US$0,000028 each to 350 million ordinary shares with a nominal value of US$0,00028 each.

The shareholders would also be asked to approve increasing the authorised share capital from US$98 000 comprising 350 million shares to 600 million ordinary shares worth US$168 million at US$0,00028 each.

Apart from approval for the private placement of 103, 7 million ordinary shares at a subscription price of US$0,1430 each, shareholders would also be asked to give their blessings for the waiver of their pre-emptive rights. In addition, NBMZ directors will seek shareholder consent to utilise excess resources, over and above the regulatory minimum capital requirements, to buy back 103,7 million shares owned by the strategic investor during the period between the fifth and ninth anniversary of the investment.

"The buy-back option price per share shall be equal to US$0,1430 per ordinary share, plus a return compounded at 10 percent annually for the first five years of the investment and 5 percent annually from year six to year nine," said NMBZ.

NMBZ said dividends received during the period between the date of investing and the date when the shares are bought back would be deducted from the amount accrued under the annual fixed return due to the investor. The shares bought back by the company from the strategic investor in terms of the buy-back option would be cancelled from the company's register.

Further, directors will seek shareholders approval at the AGM to exercise an early buy-back option on all of the 103,7 million ordinary shares if the strategic investors breach the share subscription agreements.

In the event of the breach of contract the shares would still be bought back at US$0,1430 each plus the return compounded at 10 percent per annum for the first five years and 5 percent annually from year six to year nine.

Said NMBZ: "A premium of 20 percent shall be added to the early buy-back option price defined above should the exercise of the early buy-back option be triggered by events within the control of the company."

Again, any dividends received by the investors during the period of the investment would be deducted from the amount that will have been accrued to the foreign investors when the share buy-back option exercised.

Directors of the financial group also want shareholders to approve the placing of authorised but unissued ordinary shares under the control of directors.

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