From : Financialgazette.co.zw
31 May 2012
By : Shame Makoshori
The National Social Security Authority (NSSA) has entered into a pact with controversial British mogul, Nicholas van Hoogstraten, ending years of bickering over insolvency-threatened Rainbow Tourism Group Limited (RTG), desperately seeking a lifeline to emerge from the woods.
The move could usher in a new era at the Zimbabwe Stock Exchange-listed hotel and leisure concern, whose chief executive officer, Chipo Mutasa, threw in the towel a few months ago as the crisis-torn company struggled to avert receivership after running into a going concern predicament. NSSA and van Hoogstraten are both key shareholders in RTG.
The company desperately requires a bailout package to extricate it from its current woes, which include threats of a takeover of its hotels by a local bank over a default in loan repayments.
NSSA board chairperson, Innocent Chagonda, told The Financial Gazette’s Companies & Markets (C&M) that they had entered into a truce with van Hoogstraten to save the institution.
“We have agreed on directors.He will bring in his directors.
“We will bring in our directors. This arrangement will give us common ground,” Chagonda said.
A planned US$15 million rights issue earmarked for last year had been put on hold due to expected opposition from van Hoogstraten, whose hard-hitting views on the RTG directors had been vindicated by acts of their delinquency.
At the last shareholder meeting, NSSA had ganged up with a former shareholder, Econet Wireless Limited to block van Hoogstraten’s representatives to the RTG board, worsening a fall-out between the tycoon and RTG directors and executives with whom he had fought for since over five years after they blocked his right to underwrite a rights issue.
The deal could have given van Hoogstraten increased shareholding in RTG.
As it turned out, some of the directors on RTG were caught with their hands in the cookie car in a scandal that involved Africa First ReNaissance Corporation (Afre) and ReNaissance Merchant Bank Limited, both of which were superintended and controlled by former RTG chairperson, Patterson Timba.
Timba stepped down from the RTG board following the scandal, but a raft of deals between RTG and ReNaissance Merchant Bank (RMB), which immediately went under curatorship due after lurching into an bankruptcy crisis, left the hotel group vulnerable and exposed to the tune of US$7 million.
NSSA, a deep-pocketed and unaccountable institutional investor that has often been accused of splurging cash into deals with a blind eye, was called in by government to rescue RMB.
Chagonda, who came to the NSSA board last year, has been making frantic efforts to make the compulsory pension scheme accountable after years of abuse.
The take-over of RMB by NSSA also came with the exit of Econet from RTG. Econet sold its 11,8 percent stake in RTG to NSSA for US$5,4 million, resulting in NSSA controlling around 21 percent of RTG directly. The take-over of RMB also resulted in NSSA controlling Afre, again gaining control of a 22,9 percent interest in RTG jointly held by Afre and its policyholders.
Van Hoogstraten controls 36 percent shareholding in RTG.
At the June shareholders’ meeting last year, the tycoon, whose interests cut across sectors, had nominated Shingirai Chibanguza, Ian Haruperi and his two sons, Macmillan Rhett Hamilton and Alexander Setti Hamilton to sit on the board.The meeting had reappointed Trynos Kufazvinei and Godfrey Manh-ambara and confirmed the appointment of Tracy Mpofu to represent the interests of Econet Wireless Zimbabwe as well as that of Christopher Chiraro, John Gould and Shadreck Vera seconded by Afre Corporation.
Van Hoogstraten had attacked on the board, claimed vote-rigging had denied him representation for his 36,07 percent equity interest in RTG.
“As the major shareholder in the company with a 36 percent-plus holding, we are entitled (in a properly-run public company) to appoint three directors and the chairperson,” van Hoogstraten said.
He had also questioned the company’s high capital gearing and the board’s due diligence in appointing RMB, which he called a mickey-mouse bank, as the conduit of a US$7,5 million loan from Afreximbank last year.
Chagonda said his board could not ignore van Hoog-straten due to his mat-erial investment in RTG.
“We could not ignore him because he is a major shareholder. It was important that we engaged him rather than what happened in the past when a major shareholder would not be engaged,” Chagonda told C&M.
He, however, said they had not granted him the right to overhaul management.
“We cannot give him management control,” said Chagonda, indicating that NSSA’s management was working out modalities for the replacement of Mutasa.
There were concerns that should van Hoogstraten not make an input into the appointment, NSSA’s management could prefer an executive they could easily manipulate or who would be beholden to the NSSA executives under an endemic culture of patronage in Zimbabwe’s corporate politics.
This could undermine RTG’s fortunes.
Apparently, van Hoogstraten would favour the dismissal of the acting RTG CEO, Pascal Changunda, who is very much a relic of the past.
Van Hoogstraten had told C&M two years ago: “In order for the company to move forward in the new economic climate this deadwood needs to be replaced with competent and honest persons who will act in the interests of the company and its shareholders-not in their own self interest as have been the position in the past.”