Property magnate, Nicholas van Hoogstraten is pushing for an extraordinary general meeting (EGM) at CFI Holdings Limited to resolve a dispute that emerged two years ago over the sale of Langford Estates.
The fallout over Langford Estates started after a disputed October 2015 EGM gave an emphatic nod to the Zimbabwe Stock Exchange (ZSE) listed concern to dispose of the 834 hectare estate to Fidelity Life – another concern whose shares trade on the local bourse.
Van Hoogstraten, through his investment vehicle Messina Investments, which holds about 35 percent shareholding in the diversified CFI, claims there was conflict of interest when the National Social Security Authority (NSSA), one of the major shareholders in CFI, cast its vote at the EGM.
NSSA has denied the claim.
Messina also slammed ZimRe Holdings Limited, a significant investor in CFI, for casting a vote in a related-party transaction. It alleges that there was no full disclosure to the ZSE, on which Fidelity, ZimRe and CFI are listed, when the deal was consummated.
The Financial Gazette’s Companies & Markets can reveal that Messina is threatening to call for the convening of another EGM if the transaction is not reversed.
In a letter to CFI dated May 2, 2017, Messina made its intention to call for an EGM known.
“We refer to our letter to you of 3rd April and, having taken legal advice, are now demanding the requisition of an EGM to properly put the second resolution of the 16th October 2015 before shareholders as a special resolution,” reads part of the letter.
“Furthermore, (CFI must) properly advise shareholders that the proposed transaction is a related party transaction. You are to treat this letter as a formal notice to call for an EGM as we are entitled to do so,” it said.
CFI’s balance sheet has been crippled by high gearing, with one of its key assets, Victoria Foods, going into judiciary management. The disposal of Langford Estates, worth US$18 million, saw Fidelity expanding its land bank in Harare, where it has been undertaking substantial housing developments.
While van Hoogstraten claims that he has lost at least US$10 million as a result of the deal, the transaction has helped unlock long-term capital for CFI.
Since 2009, CFI has been failing to access appropriately priced and structured capital to strengthen its balance sheet in the face of a turbulent economic environment. CFI held 81 percent shareholding in the vast Langford Estates, located about 15 kilometres south-west of central Harare.
But van Hoogstraten argues that there were serious violations of CFI’s Memorandum and Articles of Association when the shareholders agreed to let go Langford Estates. Messina has approached at least three regulators including the ZSE, to look into the issue, but no action has been taken almost a year after the investment vehicle filed its complaint.
Contacted for comment this week, van Hoogstraten accused management at ZSE of serious corporate governance deficiencies.
“They are corrupt and incompetent. I have had meetings with (Grace) Muradzikwa over this issue, but if we demand an EGM and they don’t (comply) we can call for it ourselves.
“All the theft at CFI was surrounding the development of stands in partnership with Fidelity. I am insisting on a forensic audit but they keep on trying to hide,” he said.
Muradzikwa is the acting chairperson for CFI.
Messina, with about 35 percent shareholding in CFI, is entitled to call for an EGM. Shareholders must hold at least 10 percent shareholding in a company to call for an EGM, according to ZSE listing rules.
But even before the journey begins, the odds seem staked against van Hoogstraten.
The Securities and Exchange Commission of Zimbabwe (SECZIM) has indicated that the 2015 EGM was legal.
“Both Fidelity and CFI transactions were sanctioned by shareholders when the two companies invited shareholder approval of the transactions,” SECZIM boss, Tafadzwa Chinamo told C&M in an earlier interview.
“It is important to note that both transactions went through shareholders’ approval processes,that is shareholders were given the opportunity to analyse the transactions and raise their concerns before voting at the respective EGMs where they had the opportunity to veto the transactions,” he said.
Through Messina, the British property tycoon has investments spanning across many sectors, including hospitality and mining. His fortune is estimated to be worth over £800 million.
If the transaction is reversed, it could have serious implications on the business. In 2015, the Rudland brothers who, through ZimRe, command a significant interest in CFI, reached an understanding with van Hoogstraten to cooperate towards rebuilding CFI, which had been paralysed by shareholder fights. Financial Gazette