FINANCIAL services group Africa First Reinsurance Corporation will today face an acid test in its bid to raise $8,6 million amid opposition from ousted executive chairperson Patterson Timba.
REPORT BY BERNARD MPOFU CHIEF BUSINESS REPORTER
Shareholders, according to a circular issued early this month, will today convene an extraordinary general meeting to vote for, or against the proposed capital-raising initiative.
Timba last week opposed plans by Afre to undertake the rights issue, which seeks to capitalise the group’s units saying the circular announcing the capital-raising initiative had limited disclosure.
Through lawyers Muza & Nyapadi, Timba wrote to the Securities Commission of Zimbabwe (SECZ) a fortnight ago querying the planned rights offer. The lawyers also wrote to the deal underwriters — the National Social Security Authority (NSSA), which has interest in the group.
Repeated efforts to get comment from Afre chief executive Douglas Hoto were in vain, while the group’s lawyers Scanlen & Holderness had not yet responded to questions sent to them at the time of going to print.
Letters seen by NewsDay showed that Timba was determined to throw spanners into the rights issue, arguing that Afre should explore other avenues to fund the group’s undercapitalised units.
“In making a determination that Afre Corporation should make an equity call to its shareholders, surely the board must have looked at a number of alternatives before discounting the same in favour of the rights offer. These alternatives have not been disclosed. We are not sure in the circumstances whether the Afre Corporation board considered an internal re-organisation, especially given the Afre Corporation Group’s composite structure, as a way of raising the required amount,” Timba’s lawyers said.
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“Our client, therefore, notes that in this proposal, NSSA is the judge, jury and executor, thereby exposing the proposal as self-serving. Given this massive conflict, is it not oppressive for NSSA and Capital Bank Corporation Limited to vote on this self-serving proposal?”
Part of the proceeds, according to a circular issued on October 4, will recapitalise FMRE Life and Health ($1,5 million), FMRE Property and Casualty Zimbabwe, FMRE Property and Casualty Botswana ($2 million), Tristar Insurance ($1,65 million) and settlement of amounts owed to policyholders ($1,33 million). The rights offer is expected to cost $550 000.
