LONDON Stock Exchange-listed and Zimbabwe-focused investment company Cambria Africa is intending to negotiate with the Reserve Bank of Zimbabwe (RBZ) to achieve a win-win solution over its blocked legacy funds totalling US$1.39 million.
Recovery of the blocked funds at parity or near-parity is expected to add 10 US cents per share to net asset value.
The debts are sitting on its books at approximately US$16 000 due to the official devaluation of the Zimbabwean dollar from parity to US$1: ZW$10.71 to the current level of US$1: ZW$85.
These blocked funds are debts which were owned by Zimbabwean companies prior to the abolishing of the US dollar as the functional currency.
The RBZ committed to provide foreign currency for the debt at parity to the US dollar.
In a statement accompanying the group’s interim results for the six months ended 28 February 2021, Cambria said there is reason to believe that the appropriate and conservative approach of converting these blocked funds at the prevailing exchange rate may be a significant underestimation of their realizable value.
“Management successfully negotiated with the Reserve Bank of Zimbabwe the payment at parity of US$1.25 million and carried the same on its books at the end of FY 2019 (full-year 2019) because Cambria had a time determinate commitment from the Reserve Bank Governor, Dr John Mangudya, which was honoured in full during FY 2020.
Hence there is reason to believe that the appropriate and conservative approach of converting these blocked funds at the prevailing exchange rate may be a significant underestimation of their realizable value. The company intends to negotiate with the RBZ to achieve a win-win outcome,” Cambria said.
Meanwhile, the company reiterated its displeasure with the board of Old Mutual plc for not protecting its shareholders in Zimbabwe from the effective freezing of their shareholding in Old Mutual.
Cambria holds 204 047 Old Mutual Limited common shares suspended on the ZSE and valued on its half-year 2021 statement of financial position at US$200 000 based on the closing price of Old Mutual Limited on the ZSE at suspension.
“Should the company be able to repatriate these shares to Johannesburg Stock Exchange where it purchased them or UK where these shares continue to trade, their value as at 30 June 2021 based on 67.80 p (LSE) per share is the equivalent of US US$191 468 down from US$211 500 reported on 28 May as a result of depreciation in the value of OM in London and the strengthening of the US dollar against the pound,” said Cambria.
Cambria said by acquiescing to the suspension of Old Mutual and the discontinuation of fungibility by the government of Zimbabwe, Old Mutual plc has forced the Cambria to indefinitely hold a position in Old Mutual which is neither its core business nor in its investments.
— STAFF WRITER.
