Masawara in capital-raising initiative

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Investment Company Masawara plc says it plans to raise $23,5m through a share placement at 97,5c a share to fund the acquisition of a chrome mining and smelting operation in the country among other investments.

The placing is conditional on the approval of shareholders at a general meeting to be held at noon on May 9 2011.

The company, led by business mogul Shingi Mutasa said it was assessing the proposed acquisition.

“The investment advisor is currently assessing an opportunity in the minerals and resources sector.

The opportunity is a proposed acquisition by Masawara of an interest in a chrome mining and smelting operation in Zimbabwe.

“The operation also has extensive mining claims in Zimbabwe, predominantly in the chrome belt, and it is intended to surface mine viable claims.

“A memorandum of understanding has been signed and detailed due diligence is underway. The total investment is not expected to exceed $12,1 million.”

The company said it proposes to increase its interest in companies in which Masawara already had interest as a way of unlocking value.

In January the group acquired 50% of Telerix Communications, an Internet service provider in Zimbabwe.

Telerix intends to expand its services to include wholesaling of international bandwidth to corporate customers and other Internet service providers and the establishment of fixed, nomadic and ultimately fully mobile broadband services via fibre optic and WiMAX network architecture.

Masawara said part of the capital raised would be targeted at investment opportunities in high- growth sectors in Zimbabwe and the region considered to achieve a minimum internal rate of return of 25%.
In its results for the year to December 2010 published on Tuesday, Masawara recorded a loss of $2,2m.

The company said its performance had been adversely affected by the imputing of interest on shareholders’ loans that were capitalised prior to listing, along with a poor performance by associate company TA Holdings.

In March, Masawara successfully completed the acquisition of BP Zimbabwe (Private) Limited (BP Zimbabwe) and Shell Zimbabwe (Private) Limited (Shell Zimbabwe).

Collectively, BP Zimbabwe and Shell Zimbabwe own some of the largest petroleum product infrastructure in Zimbabwe, with one of the widest distribution networks comprising in excess of 70 retail sites and 10 depots.

The company said it qualified as an indigenous Zimbabwean for the purposes of the Indigenous and Economic Empowerment Act and is not currently restricted from acquiring majority control of any Zimbabwean company or business.

“Masawara intends to remain indigenous and the directors believe that doing so will enable the company to exploit additional opportunities,” Masawara said.

As at December 31 2010, shareholders’ equity amounted to $60,8 million, and the group held cash and cash equivalents of $11,5 million. A deposit of
$8 million had also been paid in respect of the acquisition BP Zimbabwe and Shell Zimbabwe.