From The Herald.co.zw
30 June 2011
British business mogul Mr Nick van Hoogstraten’s bid for representation on the Rainbow Tourism Group’s board crashed yesterday after other shareholders rejected his nominees at the group’s annual general meeting.
The businessman had proposed Mr Shingirayi Chibanguza, Mr Alexander Hamilton, Mr Maximilian Hamilton and Mr Ian Haruperi to represent him.
Mr Hoogstraten had chosen them as directors to represent his 36 percent interest in the group.
The resolution was dismissed with an average 61 percent of the shareholders voting against the four proposed directors of RTG.
Mr van Hoogstraten’s appointees were also rejected on the grounds that they did not have convincing experience in business to “add value” to the group.
But Econet’s nominees to the board were approved as directors with an average 61 percent majority voting in favour.
They are Mrs Tracy Mpofu, the new chairperson, directors Mr Krison Chirairo, Mr John Gould and the re-elected pair of Mr Trynos Kufazvinei, Mr Godfrey Manha-mbara and Mr Shadreck Vera.
Mr van Hoogstraten expressed regret at the outcome of the AGM. He said he would call for an extraordinary general meeting to expose “the shady past” of fellow shareholders Econet Wireless and Renais-sance.
“The outcome was obvious,” he said. “The fraud will continue. We will call an extraordinary general meeting, but prior to that, obviously with a circular to shareholders, we will expose all the fraudulent dealings of this company involving Renaissance and Econet, going back to 2005.”
The RTG board, controlled by Econet, Afre and Renaissance – with a combined 43 percent mandate from shareholders – had taken a position that Mr van Hoogstraten’s nominees would be rejected to avoid
potential conflict of interest.
There is ongoing litigation between RTG and Messina Invest-ments Limited, owned by Mr van Hoogstraten, over the disputed outcome of a rights offer Messina underwrote in 2005 in which it claims to have been defrauded.
The businessman claims he was defrauded of a 19 percent shareholding, which RTG denies. On the basis of the litigation the RTG board claims if Mr van Hoogstraten’s nominees were approved to sit on the board, there could be conflict of interest, which they fear could affect the well-being of RTG.
As Herald Business had predicted, the AGM almost degenerated into an explosive encounter, a feature that has perennially characterised RTG AGMs.
This time, all other resolutions on the agenda were passed unanimously.
The board and RTG lawyers had to remind the British businessman countless times, without conceding, that he could not bring to the AGM issues for discussion that had not been included on the agenda of the meeting.
Mr van Hoogstraten incited heated debate as soon as the AGM was opened and shareholders were told they would have to vote on adoption of the group’s financial accounts for the 12 months to December 31, 2011.
The British businessman queried the authenticity of the financials, especially with regards to how the hotel group had contracted a US$20 million debt.
He also queried why the group had not done with due diligence the selection of their bankers when they settled on Renaissance Merchant Bank, which converted to its own use the US$5,1 million secured from the Afreximbank.
RTG cannot access the funds as RMB was placed under curatorship by the Reserve Bank of Zimbabwe after it unearthed irregular transactions and abuse of depositors’ funds.
In response, RTG chief executive Mrs Chipo Mtasa explained that US$10 million was borrowed to fund refurbishment of A’Zambezi River Lodge in Victoria Falls as well as the refurbishment of its flagship, the Rainbow Towers.
“The firm contracted short-term debt after dollarisation. There was no working capital. Short-term loans of US$9 million were secured to fund working capital requirements. No capital had been availed to the group,” she said.
Mrs Mtasa said the group’s long-term debt of five-year tenure and Libor plus 5 percent interest, was linked to specific assets and cash flow.
She said the group was working to reduce short-term gearing to 30 percent from 54 percent.
RTG intends to dispose of non-core assets – expected to raise US$2 million – and use the proceeds to retire the hotel group’s short-term liabilities.
Mrs Mtasa stressed that RMB had been a partner since 2002 and provided several facilities to the group.
RTG has sought legal advice on the funds trapped in the merchant bank. They were advised that the prospects of recovery were bright.