TN Holdings is seeking shareholder approval to demerge TN Bank and subsequently list it on the Zimbabwe Stock Exchange, as it adopts a cocktail of measures to restructure the group.
Shareholders will also be asked to approve the injection of $20 million into the bank by Econet Wireless Zimbabwe (EWZ) in order to recapitalise its operations and the rebranding of TN Holdings to Lifestyle Holdings Limited. After the transaction, TN Holdings shareholding in the bank will be reduced to 55% while the bank capital base will rise to $32,9 million.
Under the deal, EWZ will subscribe for 62 344 140 ordinary shares in TN Bank at a subscription price of $0,3208 per share.
According to a circular to shareholders issued ahead of an extraordinary general meeting scheduled for July 5, TN Holdings said the demerger would be achieved through the issuance of 76 203 638 TN Bank ordinary shares to TN Holdings shareholders at a subscription of $0,0000001 per share.
Ten shares will be issued at an allotment ratio of one TN Bank share for every ten TN Holdings shares Limited held.
TN Holdings said the rationale to demerge the bank stemmed from a perception the banking arm had strayed from its core business and ventured into manufacturing and retailing, among other ventures.
“TN Bank Limited has, however, leveraged on synergies with other members of the TN Holdings Limited Group through sharing infrastructure such as distribution network, sharing head office resources and providing funding to those customers of the other subsidiaries in the group who qualify for funding after going through the vetting and credit appraisal processes laid down by TN Bank Limited,” reads part of the circular.
“This model has resulted in the reduction of the burden of occupancy costs as the occupancy costs of the common areas are shared between the furniture company, the bank, the Econet franchise shops and other business units that operate from the same floor space.”
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The envisaged recapitalisation will give TN Bank a strong base and capacity to gain market share and grow. The bank will also be in a position to increase its branch network.
