Econet seeks to unlock debentureholders value

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    Harare – Following a cautionary statement issued last week, Econet is reported to be planning a large scale restructuring exercise involving its parent company Econet Wireless Global.

    In a cautionary statement issued on 17 September the local unit advised foremostly debenture holders and members of the investing public that the company’s board was engaged in discussions and evaluating various proposals which if implemented may have a material impact on the company’s share price value.

    In 2017, Econet undertook to raise $130 through financial instruments including debentures and a rights offer.

    The primary Econet proposal to shareholders then before rejection entailed payment of rights issue shares in an offshore account since the proceeds were targeted at extinguishing foreign debt some of which was nearing default.

    Upon rejection, the parent company opted to cover the foreign component of the obligation through availing $50 million in exchange of debentures of similar equivalence.

    In light of the continued cash crisis in Zimbabwe which is significantly constraining forex outflow and settlement of international obligations, Econet has to date failed to find a way to unlock value for the debenture holders.

    Last year the company announced its plans to list the securities on an external bourse as a way of unlocking value. This coincided with a broader plan of externally listing the parent group which now controls a huge base of assets across the region.

    Reports then suggested the company’s IPO on the LSE could value the group at $8 billion after factoring additional regional acquisitions, while allowing for proceeds receipts which may then be committed towards settling debenture obligations. Sources suggest the possibility of this move coming to fruition is still very high.

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