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A small windfall for Old Mutual Zim shareholders

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OLD Mutual shareholders on the Zimbabwe register are expected to get at least US$9 million worth of Nedbank shares on Monday, after the group secured regulatory approval for the unbundling of a portion of its shares in the banking group.

DUMISANI NDLELA

Old Mutual announced in June that it would unbundle all the Nedbank ordinary shares held by Old Mutual Emerging Markets Limited, amounting to 62 131 692 Nedbank ordinary shares and comprising 12.2% of the issued ordinary share capital of the banking group, to shareholders by way of a distribution in specie.

This, the group said, followed the conclusion of a managed separation process in 2018, under which Old Mutual retained minority shareholding in Nedbank, representing 19.4% of the Nedbank ordinary shares currently in issue.

An internal review of the Nedbank stake by the board had however led to a realisation that it was in the best interest of shareholders to dispose of a majority of its Nedbank stake through the unbundling in order to simplify the group, allowing investors to focus on the core operations of Old Mutual.

There are approximately 62 700 000 Old Mutual shares on the Zimbabwe register. Each Old Mutual shareholder will receive 1.31954 Nedbank shares, listed on the Johannesburg Stock Exchange and the Namibian Stock Exchange, for every 100 Old Mutual shares held.

This implies that the total Nedbank shares due to Zimbabwe shareholders will be about 831 310. However, shareholders will receive small cash payments for fractional shares as required by the JSE listing requirements.

This amount will be determined with reference to the volume-weighted average rand price of a Nedbank share traded on the JSE on Wednesday this week, being the first trading day in Old Mutual shares on the South African register after the last day to trade the previous day, reduced by 10%.

The cash payment will be made in Zimbabwe using the official exchange rate, which is far lower than the parallel market rate. Shareholders will hold their Nedbank shares through a Corpserve nominee register.

A beneficial entitlement to unbundled Nedbank shares recorded on the Corpserve nominee register will become a Corpserve nominee participant in respect of the Nedbank shares. The Corpserve nominee register will be credited with the beneficial entitlements to unbundled Nedbank shares on the distribution date, which is Monday, 8 November 2021.

Investment income arising from the unbundled Nedbank shares held directly or indirectly by any Zimbabwean resident, and the disposal of such shares, may be subject to applicable exchange control restrictions, Old Mutual said.

In Zimbabwe, Old Mutual warned its shareholders that the unbundled Nedbank shares are likely to be treated as dividends in specie in the Zimbabwean taxpayers’ hands.

Therefore, the Zimbabwe Old Mutual shareholders would be required to include the gross dividend in specie in their taxable income, where it will be taxed at a special rate of 20%.

 “No Zimbabwean stamp duty should be payable by Zimbabwean tax-resident Old Mutual shareholders in respect of their receipt of unbundled Nedbank shares,” the company advised.

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