…Requisitions EGM to reverse Langford sale
NDAMU SANDU
Nicholas Van Hoogstraten’s M e s s i n a I n v e s t m e n t s Limited has
requisitioned an extraordinary general meeting (EGM) for CFI Holdings shareholders on May 29 to reverse a 2015 resolution which allowed the
group to engage in land-fordebt swap deal.
In 2015, CFI entered into a transaction in which Fidelity Life took over the group’s debts to a consortium of banks in return for 81% in Langford
Estates in a deal worth US$18m. Langford measures 864ha.
The British businessman has been calling for the reversal of the transaction citing irregularities.
In a circular to shareholders, CFI said the May 29 EGM has proposed as an ordinary resolution to set aside the ordinary resolution of October 16, 2015 for lack of competency at law. Another resolution is the setting aside
of the of the sale of shares agreement entered between CFI and Fidelity Life for the disposal of 81% of the equity of Langford Estates 1962 (Private) Limited due to lack of approval from the shareholders, failure to follow
peremptory provisions of the Listing Rules and inconsistency
with the invalid October 16 2015 Resolution.
The EGM has proposed a resolution that the legal actions instituted by directors of the company in setting aside the above transaction be and are
hereby ratified, and that the directors of the company be and are hereby authorised to do any and all such things, as may generally be required or
necessary to give effect to the above”.
Messina has 18.56% shareholding in CFI.
CFI said the company had been occasioned with several legal opinions regarding the legality of the disposal of the 81% equity stake in Langford
Estates. The legal opinion said the transaction to dispose of Langford Estates was a related party transaction as Stalap Investments (Pvt) Ltd, an
investment vehicle of Zimre Holdings Limited and National Social Security Authority, who together, exercised more than 10% of the votes, also had/
have substantial control of Fidelity Life. It was also not disclosed that one of the Stalap Investments (Pvt) Ltd/Zimre Holdings Limited nominated
directors, Timothy Nyika said on the boards of Zimre, CFI and Fidelity, the company said.
Another legal opinion was that while the judgment under Case No. HC 1164/17 set aside the proceedings of the EGM held on November 15,
2017, this judgment is pending appeal in the Supreme Court.
Given that the disposal of Langford Estates was not in the ordinary course of the Company’s business, and in light of the substantial
consideration of the transaction, the resolution for the disposal tabled at the
meeting on October 16, 2015, ought to have been tabled to the shareholders by way of a Special Resolution and not as an Ordinary Resolution.
This meant that the resolutions passed at the meeting held on 16 October
2015 are therefore null and void with no effect.
There was also a legal opinion that the resolutions passed on October 16, 2015 did not in actuality, ratify the sale of shares agreement as the
resolutions specifically made reference to the disposal of
81% of Langford for a total consideration of US$18m and no other sum, whereas the sale of shares agreement stated the purchase price of the
transaction at US$16 487 913.
CFI is a ZSE listed Zimbabwean conglomerate predominantly involved
in milling, retail, poultry, property management and property development.
The May 29 EGM revives the fight for the control of the company between van Hoogstraten’s companies and Stalap Investments.
When Stalap in 2017 made an offer to minority shareholders of US$0.22
per share after exceeding the mandatory 35% threshold, van Hoogstraten made a counter offer of US$0.46 per share. The Stalap offer found
no takers.
In November 2017, Stalap gave CFI 21 days to call for an extraordinary general meeting for the sacking of then deputy CFI chief executive
officer Shingirai Chibanguza after an audit at Farm & City had unearthed weak corporate governance and possible conflict of interest
on the part of the executive.
Van Hoogstraten called for an EGM for the removal of CFI directors Ephraim Chawoneka and Douglas Mamvura on the basis that there were
representing the interests of NSSA, which had already exited the group. The duo resigned before the December 6 EGM.
The fight has also affected the performance of the company whose shares has been suspended from trading by ZSE. In 2018, ZSE suspended
CFI after it failed to comply with free float requirements as per the local bourse’s listing rules, paragraph 4.25, which stipulates that 30% of each
class of equity shares shall be held by the public, unless otherwise agreed with the committee.
ZSE ordered CFI to appoint a substantive board chairman, substantive CEO
and chief finance officer and director. It was also ordered to appoint independent nonexecutive directors who are not associated with any of
the companies’ shareholders.
The company, however, has not satisfied some of the set conditions put forward by the ZSE.
In its inflation-adjusted financial results for the year to September 30, 2019,
revenue for CFI went up 25% to ZWL$347.8m from ZWL$277.9m in the
comparative prior year.
