AFRASIA Kingdom Zimbabwe Limited (AKZL) shareholders have approved the group’s $100 million capitalisation exercise despite initially raising concerns over the bank’s bad loan book and name change.
Speaking at the group’s incident-filled extra-ordinary general meeting in the capital on Friday, which among other issues approved the repurchasing of shares owned by a company linked to founder Nigel Chanakira, some shareholders said management should up the gear in managing risk after the company incurred losses due to rising non performing loans.
The repurchase of Crustmoon’s 30% in the financial services group is expected to pave way for the group’s two-pronged recapitalisation exercise involving a private placement and rights offer.
Under this initiative, $5 million will be raised through a rights offer underwritten by AfrAsia Bank Limited (ABL) and $15 million via a private placement.
The group will undertake subsequent phases of private placement to raise $80 million.
Group chief executive officer Lynn Mukonoweshuro said Chanakira would get $2,5 million in cash and retain the Kingdom trademark , an arrangement some shareholders felt was prejudicial to them. She said there was no value attached to the Kingdom brand adding that the group remains optimistic that it will retain to profitability.
“After research was done, it’s very clear the trademark is closely associated with the founder, and the two brands are intricately intertwined, therefore there was no value ever placed on the trademark . . . The directors took a view that the founder of AKZL perhaps deserved a hand in refocusing his business strategy while allowing the group to move forward with our own business strategy,” Mukonoweshuro said.
Some shareholders felt that renaming of the bank could affect business prospects since the AfrAsia brand is yet to be fully established in this market.
Mukonoweshuro said some of the assets to be transferred to Chanakira were non-performing loans where prospects of recovery are limited.
Minority shareholder John Pilgrim said he was unhappy over the bank’s decision to enter into transactions without bankable security.
The resolution on the issuance of preference shares had to be decided by a secret ballot after a request by one of the shareholders, Old Mutual. Old Mutual, through is life assurance arm and Old Mutual Zimbabwe Limited has 5,6% in AKZL which was inadequate to call for a secret ballot according to AKLZ’s articles of Association. Two other shareholders supported Old Mutual. After a secret ballot, 93% voted in favour of the issuance of preference shares and the motion carried the day.
AKZL non-executive director and a representative of ABL, Kamben Padayachy, said the Mauritius-based anchor shareholder would remain committed in the bank and would ensure that effective credit processes are in place.