In a notice to shareholders, Econet said 84.8% (0.2% short) of the shareholders accepted the offer for the conversion of debt to equity as had been proposed in the initial November 8, 2018 circular. However, some minority shareholders raised concerns about the conversion of debentures to equity.
"Consequently, the board decided to adjourn the EGM that was held on November 29 to consider the concerns. Take note that the directors are still considering the issues. Consequently, the company further postpones the EGM and the resolution for the conversion of debentures to equity sine die," said the company.
Econet will, however, proceed with the separate listing of Cassava after shareholders approved of its unbundling on the November 29 EGM. As a result of the demerger, 583,453,309 debentures being 50% of 1,166,906,618 debentures in issue in EWZL will be transferred to CSZL, with the balance remaining in EWZL.
Econet says the split of the debentures between EWZL and CSZL has been necessitated by the fact that debentures conversion has not taken place.
Under the transaction; 770 million Cassava Shares representing 77% of the initial shares were issued on credit to members of EZWL pro rata to their shareholdings. Further 200 million representing 20% of the initial issue were issued on credit to EWZL, 30,000,000 shares representing 3% of the initial issue were issued on credit to the Employee Share Trust for the benefit of both EWZL and CSZL employees as at the record date.
The proposed debenture conversion has been rocked by concerns that it was unfair and will dilute the shareholding of minorities. Consequently, one of the aggrieved minorities, DCP and others lodged a complaint with ZSE and SECZ.
According to DCP, the proposed debenture exchange will be a very favourable related-party transaction for Strive Masiyiwa and similarly unfavourable to minority shareholders.
Speaking at a recent SECZ forum to discuss amendments of the Securities Act highlighted, fund managers raised concerns about the culture of violating minority holders by major shareholders.
They hope amendments to Securities Act will prevent listed companies from ignoring minority shareholder concerns.
