Directors of Letshego Holdings, the biggest micro-lending outfit in the country, spent Friday evening fending off questions from angry shareholders who saw their company share price plummeting during the fourth quarter of last year as the effect of the global credit crunch started to kick into the local bourse.
The company called EGM in a bid to raise P 350 million for its expansion plans across Africa had promised shareholders that they would be sold preference shares at P 12 a piece from P 15 a piece before the dark clouds of recession impacted on the Botswana economy.
However, by Thursday this week, the share price on the Botswana Stock Exchange had slouched to P 11 per share irking shareholder for being sold their company at a much higher price than the non-shareholders.
“It is very unfortunate and at the moment there is nothing that we can do,” the managing director of Letshego Holdings, Jan Claassen repeatedly told investors who seem not to comprehend the market dynamics.
Claassen consistently told them that the main reason behind the exercise was to raise enough cash that would give them the firepower to increase their footprint across Africa without burdening the company with undue debt from commercial banks.
The move is in line with what the company’s financial director, Colm Patterson, told Sunday Standard last month saying the cash raised from the exercise will be used to strengthen the operation of the company as it intends to be a big player in the African market.
“ The share preference scheme will ensure that the existing shareholders increase their shareholding in Letshego and the exercise is open to all our shareholders,” he said.
“The funds raised from the offer will be used to bolster the capital of the company to be used for local and regional expansion and working capital requirements,” the statement released by Letshego Holdings said.
Letshego Holdings is the oldest and the largest micro-lending company in the country with a book value of over P 1 billion. It has other operations in Tanzania, Uganda, Swaziland and Zambia while plans are afoot to open other operations in Mozambique and Ghana in the near future.
“We believe that this would be a good time for shareholders to participate in the share preference scheme exercise,” the directors of the company said, adding that “this would provide a solid base to work on” in relation to regional expansion.
The resolution, which was ultimately passed with 88 percent of shareholders’ approval, saw directors having to defend the future plan of the company for over one hour at a meeting held at the Gaborone International Conference Center (GICC).
Under the plan, the offer will be open on February 4 and is due to close on February 25 this year.
In the four new countries where the company is operating within, it is already showing some impressive results.
Further, the company is expected to issue a debt instrument to the tune of P 1 billion , which has already been approved by shareholders. The details of the structured plan are expected to unfold during the course of this year as it tries to bolster its position in the African continent.
Africa has shown a great support for micro-lending companies, which ordinarily have flexible rule as compared to the traditional banks.