Zimbabwe’s largest mobile telephony company Econet Wireless plans to raise $130 million from shareholders to pay foreign loans it is struggling to settle due to a severe dollar crunch, it said on Tuesday.
Econet said in a statement that to avoid defaulting on external obligations, it had decided to raise money via a rights issue, adding that foreign currency shortages made it difficult for the company and its subsidiaries to pay foreign loans.
The Reserve Bank of Zimbabwe last November introduced a “bond note” currency to ease chronic cash shortages, but long queues have remained at banks, which have continued to impose stringent limits on cash withdrawals.
The $130 million is the largest amount that any Zimbabwean company has attempted to raise from shareholders since the southern African nation dumped its inflation-ravaged currency for the U.S. dollar in 2009, according to stock exchange data.
“To avoid defaulting on its loan obligations, the company intends to raise foreign currency from its members by way of a rights offer of shares and linked debentures,” Econet said.
Shareholders would buy shares at a discounted price of 5 cents, compared to the share price of 30 cents at Monday’s closing price on the Zimbabwe Stock Exchange.
Source: The Zimbabwe Daily