Local telecoms company Econet Wireless Zimbabwe is looking to raise US$130 million in the local market through the issue of shares and debt as an arrangement to put together capital that will be used to clear foreign loans.
It will, however, require shareholders to make the payments for the rights issue in United States Dollars directly to an offshore account held with Afrexim Bank in Egypt.
According to local business publication, the Source, this information was circulated to shareholders who were notified how the move was driven by the critical shortage of foreign currency in overseas Nostro accounts for Zimbabwean banks.
With limited US dollars from the Zimbabwean market replenishing those accounts their balances have depleted and companies like Econet with foreign payment obligations are failing to meet them. The offshore payments workaround for the rights issue will ensure that the funds raised are able to service the loans without local foreign currency bottlenecks.
This transaction is being underwritten by Econet Wireless Global, the private global entity with a 30% stake in Econet Zimbabwe. It is, however, subject to approval from the Reserve Bank of Zimbabwe (RBZ) which set up priority lists for foreign currency payments as part of dealing with the currency flight.
Since Zimbabwe adopted a multi-currency regime Econet has borrowed extensively from foreign financiers to facilitate a network expansion plan which has seen it develop the most extensive mobile network infrastructure in Zimbabwe.
It currently has the widest coverage for mobile broadband and voice services which include 2G, 3G and 4G/LTE base stations.
Its list of creditors that is set to be paid a total of US$128 million through this rights issue are Ericsson, the Industrial Development Corporation from South Africa, the African Export-Import Bank and China Development.
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