CFI Holdings Limited will hold an extraordinary general meeting (EGM) that seeks to reverse the sale of 81 percent of Langford Estates to fellow Zimbabwe Stock Exchange listed entity Fidelity Life Assurance.
The sale of 81 percent in Langford Estates was approved and executed to completion in October 2015, with the buyer, Fidelity having already started land development.
However, the 2015 deal left some of CFI’s shareholders aggrieved with Messina Investments Ltd (Messina), which has requested for the latest EGM saying the 2015 resolution to pass this deal was “defective”.
Messina, with a shareholding that has varied from 14 percent to 26 percent in the last eight years, argues that the 2015 transaction had “material anomalies affecting the validity of the approval granted”.
Messina is of the opinion that 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.
It also believes 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 percent of Langford for a total consideration of US$18 million and no other sum. Whereas the sale of shares agreement stated the purchase price of the transaction at US$16 487 913.
The requisitioned EGM thus seeks to table to the shareholders Messina’s proposed Resolutions aimed at highlighting and correcting certain procedural shortcomings that surrounded the proceedings of the EGM held on November 15, 2017.
If passed, the proposed resolution will set aside the sale of 81 percent of Langford Estates, subject to ongoing litigation between CFI and Fidelity in the relevant tribunals.
Analysts have, however, questioned the rationale of holding this EGM considering its subject to matters before the courts and that even if the resolution is passed it will still have to be made an order of the court.
The company is before the courts, with no date for a hearing, for the same transaction after it lodged a claim against Fidelity before the Arbitration Tribunal for an award declaring the Sale of Shares Agreement for 81 percent of the shares in Langford Estates null and void on the basis that certain conditions precedent to the agreement were not met.
Further to the arbitral proceedings, the company is also before the courts for issues related to the same transaction and the matter awaits a set down for a hearing on the merits of the special pleas and exceptions filed by Fidelity and the banks.
This is also not the first time the CFI is having an EGM with regards the Langford deal. An almost similar EGM was held in November 2017 and a resolution to reverse the Langford sale was passed.
The company, alongside the acting chair Ms Itai Pasi and Willoughbys Investments were however taken to court by shareholders Stalap Investments (Pvt) Ltd, Zimre Holdings Limited and two others and the EGM was ruled null and void for lack of compliance with the Companies Act and the ZSE listing requirements. Willoughbys Investments has since lodged an appeal of the judgment in the Supreme Court under Case No. SC 635/19, which appeal is yet to be determined.
The High Court also ruled that acting chairperson Ms Itai Pasi was not lawfully appointed as chairperson for the purposes of the requisitioned EGM and this made all proceedings a nullity.
Interestingly, Ms Pasi is still listed as the acting chairperson in the circular calling for this EGM.
With so many related issues before the courts, those voting for the resolution to set aside the Langford sale, might have to wait a bit longer before celebrating passing of the resolution.
Even if the courts end up ruling in favour of Messina, the company’s legal advisors have already advised that the company will be exposed to claims from either or both Fidelity and the banks for restitution and/or damages, together with the accrued interest and any settlement costs arising.
However, should the resolutions fail to pass, the company, subject to the outcome of the Supreme Court appeal under Case No. 635/19, risks being unable to sustain the ongoing arbitration and action in the High Court under Case No. HC 1164/17 for lack of authority.