Econet Wireless Zimbabwe Limited (Econet) and EcoCash Holdings Zimbabwe Limited (EcoCash Holdings) are in talks for a proposed Scheme of Reconstruction. This scheme entails the transfer of Financial Technology Businesses from EcoCash Holdings to Econet in exchange for a total consideration of ZWL 509 billion.
The Financial Technology Businesses involved in the proposed transfer include EcoCash (Private) Limited, VAYA Technologies Zimbabwe (Private) Limited, Econet Insurance (Private) Limited, Econet Life (Private) Limited, MARS Zimbabwe (Private) Limited, and Maisha Health Fund (Private) Limited.
Under the proposed transaction, Econet will pay the total consideration equivalent to 521,861,057 Econet Shares, utilizing a combination of Treasury Shares and cash. Approximately 50% of the purchase consideration will be paid using 271,597,195 Treasury Shares, while the cash equivalent of 250,263,862 Econet shares will be calculated based on the 30 Day VWAP of each Econet share.
The scheme aims to transfer all shares owned by EcoCash Holdings in the Financial Technology Businesses to Econet, making them subsidiaries of Econet. EcoCash Holdings will retain Steward Bank Limited as its sole subsidiary.
This move stems from Econet’s decision in 2018 to unbundle Financial Technology and Infrastructure and Power Generation Businesses from its Mobile Network Operation business. This decision was made to ensure that the value of these businesses is fully reflected, as they had developed within the MNO business.
Following the rights offers undertaken by both Econet and EcoCash Holdings, they now share the same controlling shareholders, with over 90% of the issued share capital of both companies under the same control.
The proposed Scheme of Reconstruction signifies a strategic move aimed at enhancing the alignment of Econet’s business structure and maximizing shareholder value.
