The Botswana Building Society (BBS) issued warning bells to the market Friday about its intentions to redeem Bifm Capital paid up shares as relations between the two hit rock bottom.
This was in a notice sent to Bifm Capital FridayÔÇöjust a day after the Society’s board members took unanimous decision to redeem ÔÇô within the next six months.
Last month, the Society took a decision not to endorse ex-board members , Rhys Carr and Tim Marsland, who threatened to take the Society to court on the basis that the Botswana Development Corporation representative’s vote was “ invalid”.
BDC is on the board under the Botswana Privatisation Asset Holding, an arm that represents government’s interest in the society.
The Society’s relationship fell after the “attempted incest relationship” between Bifm Capital and the former over a P 2 billion bond tender that was won by Absa Capital.
Bifm Capital has invested P 150 million that will be redeemed, Botswana Government P 117 million, Motor Vehicle Accident Fund P 106 million and Botswana Police Staff Fund P 50 million into the Society.
Indications were rife towards the end of the week that Bifm Capital might raise the issues of the contractual agreement entered on April 26, 2007 drafted by their legal “fixers” Collins & Newman that guaranteed them a permanent seat on the board and an uninterrupted paid up shares status.
However, the Collins & Newman agreement was highly questioned by PriceWaterHouse & Coopers, the auditors of BBS and two other independent advocates who were subsequently engaged by the Society.
BBS initially had insisted on engaging Armstrongs and Attorneys to give guidance to the re-constitution of the shareholding at the time.
Further, any legal change based on the basis on unilateral decision by the Society to redeem will not fly as happened in 2005 and re-enforced by the Society’s rules.
Judges who looked at the case at the time both reached a conclusion that the Society does not have to “give any reasoning” it wants to redeem any of its members’ paid up shares provided that he has been a members for over 12 months given utmost six month period.
The move by the board was this week “applauded” by board members who pointed out that since Bifm Capital lost the P 2 billion bond tender restructuring has become difficult to deal with either the board or the management of the Society.
“There are conflicting business interests between Bifm Capital and others in BBS which, in the immediate and long term, would clearly undermine the transformation of the building society into Botswana’s first indigenous commercial bank,” one source indicated on Friday.
Meanwhile, the Society has got a strong balance-sheet and is about to roll-out the first trachee of its P 2 billion bond that will be valued at around P360 million shortly after the government bond that is due in the coming weeks.
On Friday, the head of Botswana Life, Cathrine Lesetedi- Letegele, sheeply told Sunday Standard that “I have no comment. I think the issue of redemption of shares is a matter of the BBS board,” reiterating what the courts said earlier.
