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SMM ghost haunts FBC


FBC Holdings Limited says it is stuck with three of SMM Zimbabwe’s former subsidiaries until March next year or longer, following several failed attempts to dispose the equity interests that it acquired by converting unpaid debt into shareholding two years.

The Zimbabwe Stock exchange (ZSE)-listed financial services company owns and controls 60% of Turnall Holdings Limited, 33% of Steelnet and 18% of General Beltings, which collectively owed First Bank, now FBC Bank, $8 million in unpaid loans advanced through SMM Zimbabwe.

The loan applications were approved by SMM Holdings administrator Afaras Gwaradzimba who also pledged the companies’ shares as loan security, to raise funds to implement his scheme of reconstruction.

The lender later seized the shares when the loan repayment fell due in 2008 and initially obtained a Reserve Bank of Zimbabwe (RBZ) authorisation to hold on to the shares for 12 months, which was extended by another year on expiry.

FBC Holdings deputy group CEO John Mushayavanhu on Wednesday said the financial market regulator had granted the diversified financial services company the third approval to hold the equity interests in the non-financial firms until it secures a disposal deal.

“We have been granted authority by the RBZ to extend the holding of those shares until next year,” Mushayavanhu said.

Turnall Holdings Limited, Steelnet and General Beltings were part of SMM Zimbabwe’s group when government annexed the holding company from Mutumwa Mawere’s African Resources Limited in September 2004.

In January 2006, Gwaradzimba restructured the three companies to run with independent boards.

FBC has admitted it was struggling to dispose of the assets, despite several talks, offers and bids, none of which has culminated in a deal.

Although the acquirer was dodgy on political issues, the market believes it will be difficult to find a willing taker owing to risk escalation associated with resurgent SMM Zimbabwe ownership wrangles pitting Mawere against government’s representative, Justice minister Patrick Chinamasa.

A reversal of the reconstruction process by the courts would stoke the ownership uncertainty of the three SMM Zimbabwe subsidiaries.

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