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Business Correspondent

ECONET Wireless Zimbabwe and EcoCash Holdings Zimbabwe Limited on Friday announced the successful completion of a $60.6 million rights issue on September 30, 2023. The proceeds from the rights issue will be used to pay off five-year debentures that matured in April 2023.

Econet raised US$30.3 million, with shareholders contributing US$17.1 million, representing a 56% subscription rate, while the underwriter, TN Asset Management, contributed the remaining US$13.2 million.

EcoCash Holdings raised US$30.3 million, with the company’s shareholders injecting US$10.7 million, while the underwriter put in US$19.6 million.

The debentures, which matured in April this year, were issued to finance Econet’s expansion plans over five years ago, before the demerger of EcoCash Holdings from Econet. EcoCash Holdings was subsequently listed in 2018 as a separate entity on the Zimbabwe Stock Exchange.

An early redemption of part of the debentures — which originally amounted to US$130 million — left the two companies still owing US$30,3 million worth of debentures to their shareholders.

An economic downturn in Zimbabwe, however, made it difficult for the companies to meet their US dollar debt obligations. This resulted in the two companies turning to their shareholders to raise the money through a rights issue.

Market analysts said that after paying off the debentures, which will improve the two companies’ cash flow and balance sheet, Econet will now focus on upgrading and expanding its network, as well as deploying new technologies.

In 2022, the mobile network operator invested over US$66 million in network expansion in various cities, towns and rural areas, with the upgrade work still continuing 2023 in several provinces.

Econet said the network expansion and upgrades remain imperative to support business sustainability, which has been hampered by several years of underinvestment, due to macroeconomic challenges in the business operating environment.