RioZim Limited is seeking shareholder approval to exceed its borrowing powers by $10 million to mitigate against high interest charges on bank loans that the company owes at an annual general meeting set for later this month.
Report by Victoria Mtomba
The company owes over $40 million to several banks that include Tetrad, ZB Bank and Metropolitan and the infrastructure Development Bank. The AGM is set for May 30.
In a notice yesterday RioZim said the company exceeded its borrowing powers during the last financial year.
“In line with Article 85 of the company Articles of Association, which states that the company’s borrowings should be limited at any given time to twice the value of the funds that are attributable to the shareholders and that any excess should be sanctioned by the company in general meetings, the board of directors hereby requests the ratification of said excess by way of an ordinary resolution.
“Furthermore, the board of directors is requesting, until the next annual general meeting, authority to exceed the borrowings limit, as stipulated in company articles by an additional amount in the sum of $10 million if need arises,” the company said.
Sources told NewsDay that the move was meant to curtail expenses accruing as a result of the loans.
“We are failing to service our loans and they (loans) increase with bank charges and that is having a huge impact to us as a company,” an official said.
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The directors are also seeking approval subject to the requirement of the Zimbabwe Stock Exchange to renew until the next annual general meeting, the authority granted to the directors at the AGM held in May 1994 to issue or agree to issue up to 10% of the unissued ordinary shares of the company without the same being first offered to the ordinary shareholders.
RioZim shareholders last year approved the capital-raising initiative of $10 million through a private placement, $5 million through a rights issue and $45 million through convertible debentures to GEM Raintree.
