The dispute over shareholding at telecommunications giant Mascom Wireless enters mediation next week, following a protracted showdown/ standoff between Pan African telecommunications behemoth, MTN of South Africa and DECI -an investment vehicle owned by Botswana Public Officers Pension Fund (BPOPF).
Francistown-based corporate lawyer, Sefelana Thapelo, has been agreed upon and appointed as the mediator in the dispute.
The public service pension fund who are the second largest shareholder at Mascom, through an investment vehicle called DECI (40%), have set in motion a process to force MTN (who hold 53% shareholding) to offer them a right of refusal -conferred on them as pre-emptive rights stipulated in the shareholders’ agreement, failing which BPOPF is planning to invoke a forced sale. Econet (who own only 7% shareholding at Mascom) is alleged to have made an unsolicited bid for the shares held by MTN at Mascom, a development which is being vigorously contested by BPOPF. Econet Wireless founder Strive Masiyiwa – a born ICT billionaire, while addressing a youth entrepreneurship Town Hall meeting in Gaborone alongside President Mokgweetsi Masisi in April 2019, said the Mascom transaction was almost a done deal only awaiting finalization to confirm the acquisition of MTN shares. Coincidentally, Masiyiwa is also the founder of Mascom -an acronym for Masiyiwa Communications.
The Patriot on Sunday has it on good authority that things came to a head when MTN submitted a request to executive management at Mascom Wireless seeking information, which they needed to submit to Botswana Communications Regulatory Authority (BOCRA) to facilitate the sale and transfer of their shareholding to Econet estimated to cost about US$30million. Management put a spanner in the works by declining the request and instead referred the matter to the company’s Board of Directors, whose chairman is a member of the board of trustees at BPOPF.
Notwithstanding the challenges in securing crucial information to meet the requirements of the Regulator in the envisaged transaction, MTN was advised to engage BPOPF because their proposed sale of shares to Econet effectively changes shareholding and ownership of Mascom.
From the onset BPOPF argued that Clause 12 of the Shareholders Agreement confers pre-emptive rights on them, especially when the sale of shares would result in the change of control in the company (Mascom). As a consequence, BPOPF further argued that in this case, the transaction would result in change of control hence MTN should give BPOPF a preferential offer rather that bringing their preferred buyer -Econet. A letter was written by BPOPF to MTN to this effect.
MTN replied the letter contending that they do not agree with BPOPF's interpretation of Clause 12 of the Shareholders Agreement. Frustrated with corporate bureaucracy, MTN in its response, requested to meet BPOPF as a shareholder to discuss the matter. BPOPF declined to honour the invitation, arguing that they do not hold the shares at Mascom directly and therefore insisting that the issue should be dealt with by DECI, an investment vehicle that holds shareholding at Mascom on behalf of the Fund.
The DECI Board met and agreed that parties or shareholders do not agree on the interpretation of Clause 12 and as such it was agreed that the interpretation issue should be referred to an arbitration process, which is the next dispute resolution process as outlined in the shareholders' agreement. The dispute resolution process has started; a mediator has been identified and agreed upon.
Central to the standoff is the interpretation of Clause 12 of the Shareholders Agreement which prescribes what should happen in case of change of control (shareholding) at Mascom. While MTN is adamant that Clause 12 only applies after there has been a change of shareholding/ control, BPOPF got legal opinion after learning about the unsolicited bid from Econet and were advised that any sale of shares will effectively change management control and ownership at Mascom. Therefore, BPOPF demand that they be granted preferential first option of refusal for acquisition of any shares because they are the second biggest shareholder in the company.
Should Econet acquire MTN shares they will gain majority shareholding and consequently gain management control at Mascom, hence the premature announcement by Masiyiwa, while visiting Botswana in April, that he will list some of the ‘soon to be acquired’ shares on the Botswana Stock Exchange once the acquisition is complete to give locals some ownership. BPOPF board on the other hand has instructed management to use anything at their disposal to acquire the MTN shares that have already been declared up for sale.
Efforts to reach MTN representative in Mascom board of directors, Godfrey Motsa, were unsuccessful as repeated calls to his South African cell phone number were not answered. Mascom Board chairman, Tobokani Rari, declined to shed light on the developments saying the matter is internal.
Meanwhile The Patriot on Sunday is reliably informed that it is only a matter of time before Mascom Acting Chief Executive Officer Dzene Makhwade-Seboni is announced as a substantive. Seboni, the former Chief Operations Officer who has been acting CEO since April 01, 2019 is currently considering an offer extended to her by the board to replace Portuguese Jose Couciero who led the company for 17 years.