GEM Raintree is set to acquire a 24% stake in RioZim after shareholders passed a resolution in favour of the business consortium to be underwriters of its recapitalisation efforts.
After the transaction, GEM Raintree will become the majority shareholder in the mining company followed by Old Mutual with 19% equity.
Sources told NewsDay a private placement would be conducted first.
“Shareholders voted in favour of the transaction including Old Mutual, one of the major shareholders in the company. Private placement will take place first and shares will be given to GEM Raintree followed by debentures,” the source said.
The company was seeking approval from shareholders to raise $10 million by way of a private placement, $5 million through a rights issue and $45 million via convertible debentures to Maurius-based GEM Raintree.
GEM Raintree was expected to continue increasing its investments in the company.
The transaction will result in the appointment of new management. Chief executive officer Josphat Sachikonye is expected to step down.
RioZim was last week forced to publish extra details regarding GEM Raintree after the Securities Commission of Zimbabwe (SEC) requested information on its proposed investors. SEC had argued there was not enough disclosure on the debenture.
Indigenisation and Economic Empowerment minister Saviour Kasukuwere last week also said the government was keen to have RioZim back on its feet, but said the company should respect the indigenisation laws of the country.
RioZim in its statement said Raintree was a Zimbabwean mining company owned and compliant with requirements of the country’s Indigensation Act.
According to the company Raintree was founded in 2010 by Trov Travlos and Tafadzwa Chigumbu and the company has interests in gold and coal mining.
RioZim owes banks that include Infrastructure Development Bank of Zimbabwe, Metropolitan Bank, BancABC, ZB Bank and others $50 million.