OUSTED Air Zimbabwe (AirZim) board chairman Ozias Bvute’s alleged plan to take over the national airline through a $130 million private share placement was foiled by fellow board members and Transport and Infrastructural Development minister Obert Mpofu when he kicked him out early this month, it has been revealed.
The revelations come hard on the heels of the scandals at the troubled national airline where three executives are now being charged for allegedly swindling the company of several millions through fraudulent insurance schemes and purchasing of parts at inflated prices from a myriad of middlemen.
Some of the ousted board members confirmed the existence of the proposal, but they quickly added it was shot down as soon as it was discussed at board level.
“It’s true that there was such a proposal that was once tabled, but it was shot down because it was not feasible to implement,” a former board member said.
Mpofu said he was never going to allow such a thing to happen at a State-owned corporation.
“There is no way any of our institutions can be autonomous. If they have to influence policy change they had to come to the government,” he said.
Elaborate details of the AirZim privatisation plan are contained in a confidential document entitled Information Memorandum that was prepared by MetBank and GGF Global Finance who acted as the airline’s financial advisors.
Bvute is the group chief executive of MetBank and is the immediate past managing director of Zimbabwe Cricket.
“The purpose of this Information Memorandum is to provide investment information to targeted prospective investor(s) who are being invited to acquire shares in the ordinary share capital of AirZim and invest in corporate bonds being issued by AirZim,” the document reads.
Some AirZim executives and former board members confirmed Bvute at times wanted to assume the role of executive chairman of the airline.
This thought is captured in the memorandum leaked to sister paper NewsDay.
Section 2,3 of the document reads: “The new board and proposed new management will be expected to operate independently to ensure the attainment of the set objectives as per the Cabinet-approved business plan. Whilst in the past, shareholder interference has been blamed for the failure of business, the shareholder has now pledged to allow the new team to work independently in line with the vision, mission and objectives set out in the new AirZim business plan.”
The proposed transaction was to be done in four phases beginning May 2013 and ending June 30 2014. The four phases of the transaction include the raising of $15 million for immediate resuscitation of AirZim operations through issuance of a 180-day commercial paper, issuance of a 10-year corporate bonds to current creditors and other third party investors up to $200 million, issuance of $30 million ordinary shares through a private placement and finally issuance of $100 million ordinary and preference shares to third parties for the expansion of the company and partial retirement of debt.
“June 30 2014 is the deadline for due diligence on the company by prospective investors,” the document says.
The plan envisaged pension funds, private equity funds, other international airlines, institutional investors and individuals as potential investors.
The document also proposed other means of raising capital for the airline that included leasing some of the company’s assets.
“The financial plan includes leasing out Boeing 767 for about $600 000 per month which will cover monthly fixed costs and adoption of a wave ‘W’ route pattern and reciprocating or circular route pattern to ensure viability,” the document reads.
However, the former board member said the financial plan was not practical for a number of reasons.
“We could not raise the bonds because they needed support of the insurance industry and AirZim by then was defaulting pensions.
“The airline could not lease out the B767 because it always acts cover for the presidential plan,” the board member said.
AirZim has a fleet of 11 planes three MA60s from China, three Boeing 737s, three Boeing 767s and two leased Airbus A320s.
It has few buildings in the capital, but they are all mortgaged to CBZ and it does not have title to the land on which the Harare International Airport is situated.
Bvute said the allegations being levelled against him were false.
“There is no truth to the allegations,” he said.