Vingirai in new effort to get Intermarket back

Published: 10 June 2013
Nicholas Vingirai's Transnational Holdings together with Econet Wireless Holdings Limited have resuscitated their legal battle to get the former Zimbank and Intermarket takeover reversed after filing an application at the Supreme Court seeking to have a 2008 High Court judgment where the transaction was approved set aside.

According to heads of argument filed at the Supreme Court on May 6 this year, which cites ZB Financial Holdings, Intermarket Holdings, RBZ, Mashonaland Holdings TelOne, Mast Investments and the Mining Industry Pension Fund as respondents, the two companies say the High Court judgment should be set aside and that a High Court application with costs be entered in its place.

The application comes as ZB Holdings is currently trading under a cautionary pending a capital raising deal with Indian investors who will get equity in return. Analysts say this is perhaps Vingirai's last chance to get his Intermarket assets back.

Transnational Holdings is being represented by Mtetwa & Nyambirai while Econet is represented by Dube, Manikai & Hwacha.

In 2004, Intermarket Discount House faced a liquidity crisis that could have spread to the other subsidiaries in the Holdings Company. This resulted in it being placed under corrective order by the RBZ in March of the same year. The corrective order went to further direct the removal of Michael Mahachi, Gibson Muringai and Vingirai from the board and management of the Holdings company even though other subsidiaries were not faced with the crisis.

A scheme of arrangement was undertaken in 2005 whereby all the creditors of IHL's banking subsidiaries converted their debt to equity in IHL and the following became the shareholders of IHL pursuant to the scheme of arrangement. ZB Holdings Limited then entered into an agreement with the RBZ on November 8, 2006 whereby the RBZ sold to ZB Holdings Limited the 50.99% equity it held in IHL as a result of the scheme of arrangement. The consideration for the shares was ZW$5 billion.

In 2007, ZB Holdings Limited proceeded to offer its shares to the shareholders of IHL through an undated circular.

While some shareholders took up the offer, while others, notably Transnational Holdings Limited owned by the founders of IHL group led by Vingirai, and Econet Wireless Zimbabwe Limited, declined the offer and proceeded to institute legal proceedings against the company.

Justice Chinembiri Bhunu validated the agreement that led to the ZB Financial Holdings' acquisition of Intermarket in a judgment delivered in June 2008 unbeknown to the Transitional Holdings and Econet's legal counsel.

The two groups say the sale of shares by the RBZ to ZB Holdings has been challenged on the grounds that the other shareholders of IHL at the time were not afforded an opportunity to exercise their rights of pre-emption in respect of the shares sold by the RBZ to ZB Holdings.

Econet Wireless Limited and Transnational Holdings Limited argue that "other shareholders ought to have been given the opportunity to buy the shares sold to ZB Holdings by the RBZ."

Transnational Holdings also says that other subsidiaries namely Intermarket Stockbrokers, Intermarket Life Assurance, Intermarket Reinsurance and Intermarket Discount House Zambia did not fall under the jurisdiction of the RBZ.
- Financial Express

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