eBusiness Weekly
Business Writers
Messina Investments defied Zimbabwe Stock Exchange Listing Rules after it made an off-the-market offer to CFI Holdings minorities as a counter to an approved offer made by Stalap Investments, which controls 41 percent of the company.
Messina Investments controlled by British businessman Nicholas Van Hoogstraten yesterday issued a statement appealing to minority shareholders not to sell their shares to Stalap, who currently have an offer running on the ZSE, but to sell to him at an attractive price of 46 cents, net of all dealing costs. Stalap’s offer to minorities opened on July 17 at 22c and closes on August 4.
However, the ZSE in a statement released last night, said shares can only be traded through licenced stockbrokers in order to guard against risks associated with off market trades. In the statement, issued by acting chief executive Martin Matanda, the ZSE views the notice by Messina as an unsanctioned informal offer to minorities and therefore non-compliant with listing requirements.
“The investing public is advised that ZSE has not been formally advised that Messina and any other parties it is listing in concert with, has passed the 35 percent threshold which compels them to make an offer to minorities in terms of the ZSE Listing requirements.”
Van Hoogstraten has in the past been embroiled in controversies of trading off market. He passed the 35 percent shareholding mark after he purchased 7 percent shares previously held by the Mining Industry Pension Fund. The Securities and Exchange Commission of Zimbabwe, while they had basis to reverse the transaction and to even cancel the stockbrokers licence for trading against the rules, only asked Van Hoogstraten to regularize the transaction by bringing it to the market. This took a year to do as the shares only went through recently.
Stalap on the other hand followed the legal processes required by the ZSE to make the offer to minorities. Initially ZSE had stopped Stalap from making the offer to minorities saying that it should hold the mandatory offer at the same time as Messina Investments. But Messina Investments has not formally made its intentions known to the exchange.
ZSE could have erred in its decision to reverse its request as it has now plunged the whole process being followed by CFI into chaos. Analysts say the statement indirectly shows they have picked a side although they did not necessarily provide a solution as Van Hoogstraten is being accused of making cash offers at huge premiums to shareholders.
Last week, NSSA chairman challenged the ZSE to look into the sudden movement of CFI Holdings shares session where on one trading day it rose to 31.05 cents from 25.90 cents in previous trading. Vela said there is need to enable confidence of the equities market and the exchange should not sit and watch while an investor was making a mockery of the rules.
Zimre Holdings board member, who also stands for the majority shareholder Hamish Rudland, says Van Hoogstraten has always perpetuated illegal activities including off-market trading and buying in closed periods.
Rudland challenged the British tycoon to officially make the ‘attractive’ offer instead of just communicating in the press. “When you make an offer to minorities, it is quite a rigid process. It’s a process that deals with integrity. We deal with the ZSE and it costs us money to do this process.
“So we go through the whole process and at every corner this guy is trying to block resolutions, claiming that he’s got more shares than us and that he should make an offer to minorities. He’s claiming that but he’s never made an application to make an offer to minorities.
“We got approval from the ZSE and went ahead to make the offer to minorities. We believe that the price at 22cents was very good considering where the price has been for the past five years. He’s making all these counter offers and he’s just a guy bringing disrepute to the ZSE.
“Van should make an offer to minorities through the correct channels and outline his intentions with the company as Stalap did in their offer.”
Rudland said: “We went to MIPF with an offer around 22 cents; he bought those shares at 7 cents. He held them for a year. I met MIPF and discussed with them. MIPF held about seven percent in CFI. He bought Stanbic shares in closed periods. While we have playing by the rules, he is not playing by the rules.
“He buys, makes off-market deals and he keeps the transfer shares in his drawers and in open periods he goes and trade them through the market. It’s very difficult to police but there are shares that were traded in closed period. All that is illegal activity!
“He must make the offer to minorities at 50cents that he offered in the paper and he must show funds for that. Once that has been put to bed and settled, the company needs to do a rights issue. We are backing a rights issue.
“His people sit on the board and every single board meeting for the last two or three years that I’ve been sitting on that board we have all agreed unanimously that the company needs capital.” In Stalap ZHL owns around 66 percent while NSSA owns the balance.
In his statement, Van Hoogstraten took a swipe at ZHL and NSSA claiming their representatives were corrupt however as it stands the only corrupt executive that has been weeded out of CFI is his proxy, Shingi Chibhanguza who was accused of abusing his office and company funds. In the same circular Messina claims credit for turning around CFI but they forgot to point out that former ZHL finance director Timothy Nyika (who is camp ZHL/NSSA) is the current CEO of the firm and is spear heading the turn around.
Van Hoogstraten has turned the battle for CFI into a street fight as it now seems that he wants to win control of the agro concern just to stroke his ego.
CFI is on a recovery path and most of this can only be attributed to the 81 percent share disposal of Langford Estates as the company was in a debt trap and unable to mobilize reasonably priced long-term capital to retool and finance the Group’s various operations. CFI was unable to discharge its obligations towards its secured and unsecured creditors with regards to both interest bearing and non-interest bearing obligations. It is therefore without doubt that without the disposal of Langford Estates the company would be under by now.
