Ecocash Holdings shareholders approve restructuring deal
EcoCash Holdings shareholders have approved a plan for some of the company’s units to rejoin Econet Wireless in a major restructuring deal.
Under the plan, EcoCash Holdings’ financial technology businesses, including EcoCash (mobile money), VAYA Technologies, Econet Insurance, and Maisha Health Fund, will be transferred to Econet. The deal will be financed through a combination of cash and Econet treasury shares.
The shares held by the Company, Econet, and Econet Global Limited amounting to 2,080,999,396 were precluded from voting. Accordingly, the total number of eligible shares entitling the holders to attend and vote on the resolutions proposed at the EGM was 2,113,798,533.
Shareholders (or their proxies), holding an aggregate of 1,912,277,073 shares with voting rights, representing approximately 90.47 percent of the total eligible Shares with voting rights attended the EGM. A total 85.92 percent of the eligible voting shares voted in favour of the transaction.
Econet argues that the telecommunications landscape has changed significantly since the 2018 separation of EcoCash Holdings. Regulatory changes and evolving market dynamics have made the rationale for separate entities less compelling.
By reuniting, Econet believes they can streamline operations, improve efficiency, and offer a more comprehensive suite of products and services to customers.
The company highlights a decline in the combined value of the separate entities since the demerger, with net asset value falling from over US$810 million to less than US$450 million.
Additionally, liquidity for EcoCash Holdings shares on the Zimbabwe Stock Exchange has dwindled. Econet believes the reunion can reverse these negative trends.
While shareholder approval has been secured, the deal still requires regulatory approvals from the Insurance and Pensions Commission and the National Payment Systems.
Once these approvals are obtained, Econet expects to eliminate duplicated activities and achieve cost efficiencies.
Since the book value of the EcoCash businesses falls below 50 percent of Econet’s book value, shareholder approval for the specific share and cash breakdown was not required.
However, the restructuring will likely impact the future value of Econet shares depending on how the market reacts to the combined entity.
