Econet Wireless Zimbabwe’s shareholders recently approved a US$130 million rights issue at an extraordinary general meeting (EGM) held in Harare recently.
A total of 6 resolutions which had been tabled were all approved by shareholders in the mobile network operator. With the green light from its principals, Econet will now, through the rights issue and linked debentures, proceed to raise the US$130 million needed to settle some of its obligations outside the country.
Econet has borrowed extensively to facilitate the expansion of its mobile network and has faced challenges in settling these debts using revenue from local operations because of a foreign currency shortage in Zimbabwe that has made payment outside the country challenging.
The EGM meant to seek approval for the rights offer came after Econet defied a directive from the board of the Zimbabwe Stock Exchange to hold the meeting and proceed with the rights offer when some technicalities around it were yet to be finalised.
One technicality was the inability of local shareholders to take part in the rights offer due to challenges in making offshore payments.
Econet argued that the ZSE board had no jurisdiction offer rights offers matters such as the one the operator had tabled and it went on to question the impartiality of the ZSE board secretary who sits on the board of Econet’s competitor, TelOne.
It has since set up a facility with the Reserve bank of Zimbabwe which will allow local shareholders to make payments for the rights issue to a local bank account using any currency regarded as legal tender in Zimbabwe including bond notes.