Econet Wireless shareholders recently approved the demerger of Cassava SmarTech from Econet Wireless Zimbabwe Limited, paving the way for the listing of a new diversified technology business called Cassava SmarTech Zimbabwe Limited (CSZL).
At an extraordinary general meeting held at the company’s head office in Harare last week, Econet shareholders unanimously voted for the resolution to demerge and subsequently list Cassava Smartech as a separate company listed on the Zimbabwe Stock Exchange (ZSE).
The listing of CSZL will be the largest initial listing on the ZSE and will probably be the largest initial listing in the history of the local exchange.
Shareholders also voted to authorise and empower the company’s directors to effect and operationalise the demerger and the listing of the CSZL, which is scheduled for December 11, 2018, said the group in an update statement.
The shareholder approval was seen as the last hurdle in the process leading up to the new technology company’s listing.
It followed a series of initiatives by the company, which included the publication of a detailed circular to shareholders on the planned demerger, the obtaining of regulatory approvals and a number of investor engagement road shows by the company’s senior management.
At best, the demerger will see Cassava Smartech wholly give its undivided attention and resources on its “smartech” business, a strategic decision in the eyes of Econet. Whilst the two companies are divorcing, there will be serious collaborations in the future such that (probably) we won’t even notice that they are totally different companies. Surely you can’t expect Econet to stop zero-rating the EcoCash app just because the “smartech” company is no longer under its immediate sphere of influence. As Emilia Chisango, Cassava Zimbabwe’s Finance Director, puts it.
The demerger still affords EWZL and Cassava Zimbabwe scope to continue collaborating and expand independently of each other, whilst recognising and exploiting the inherent synergies between them.
“Shareholders voted overwhelmingly in favour of the resolution to spin off Cassava and list it separately on the ZSE, with 90 percent of the votes in favour of the demerger transaction,” said Econet.
The extraordinary general meeting however deferred voting on a resolution to convert debentures (issued at a rights offer last year) into ordinary shares.
This is intended to return value to those shareholders who provided US dollars offshore to the company to allow the company to pay off its offshore debts.
“This proposal, which will be voted on by shareholders at a meeting to be held on 14 December 2018, is seen as a measure to protect shareholder value in the face of inflation that has eroded monetary values,” it said.
Dr Jim Myers, the EWZL board chairman said the directors had reflected on the views of various shareholders and elected to adjourn the EGM to December 14, 2018, to allow some shareholders that had requested more time to understand the transaction and to explain it to their clients. Earlier, an AGM that was held at the company’s head office, saw all resolutions passed by unanimous vote.
