Zimre Holdings Limited (ZHL) unpredictably terminated negotiations for the Emeritus International Reinsurance Company Limited Capital Raise transaction, citing contrary valuations between negotiating parties.
The company’s reinsurance operations across the region in Malawi, Mozambique, Botswana and Zambia were re-branded under Emeritus Reinsurance in 2018. Initially the operations were consolidated under Baobab Reinsurance Group.
“Shareholders of ZHL are referred to the cautionary announcement dated September 10, 2019, and are advised that the negotiations for the Emeritus International Reinsurance Company Limited Capital Raise have been terminated and the contents referred to in the cautionary announcement dated September 10, 2019 have ceased to have any relevance or effect on ZHL. Accordingly, caution is no longer required to be exercised by shareholders when dealing in the securities of ZHL,” said ZHL in its withdrawal of the preceding cautionary statement.
Cautionary statements had been issued in succession for shareholders to exercise caution when dealing in the securities of the group while negotiations were progressing and until a full announcement was made.
In termination of the transaction ZHL claimed there were disagreements between negotiating parties on evaluations. ZHL had become sensitive to exchange control stipulations and it also had become awake to issues of equity dilution where its stake would decrease with issuance of fresh equity.
Chief executive officer Stanely Kudenga said the company had kept an eye on dilution in terms of Exchange Control and the idea was not go below the prescribed 51 percent in terms of shareholding.
“In our discussions we also could not reach an agreement in terms of our valuations.
“Using their valuations and in terms of what we wanted to raise we could have gone below 51 percent. That is basically where we got stuck,” said Mr Kudenga.
The Exchange Control stipulates that dual listing of shares require prior Reserve Bank of Zimbabwe approval. The primary listing should be on the Zimbabwe Stock Exchange (ZSE) and a minimum of at least 51 percent of listed counter’s shares has to be held at all times.
The transaction aimed at raising $10 million in Botswana to support operations and it formed part of the group’s phased capitalisation drive extended from 2016 with a target of raising $30 million. Among other gains this was envisaged to lubricate efforts to get the reinsurance business listed on the Botswana Stock Exchange (BSE).
“With regards to plans to list on the Botswana Stock Exchange (BSE) we are still looking at some internal restructuring for capital raising to bridge that gap,” said Kudenga.