Lusaka Securities Exchange listed Madison Financial Services (ISIN:ZM00000000391) has faced a series of liquidity, credit and solvency issues governance related lapses that triggered regulatory take over some time in 2019. According to a LuSE further cautionary update and market announcement on December 24, XYLEM trading (Pty) will acquire 72.05% of Madison Financial Services. This will entail XYLEM taking over combined Lawrence Sikutwa and Associates (LSA) and ZFI Holdings Ltd stake in Madison Financial Services.
The transaction involves two separate acquisitions of shares namely: by XTL of the 100% shareholding in ZFI from Enko Africa Private Equity Fund Limited (“Enko”) being the first leg. (ZFI holds a total shareholding of 34.91% in MFS) and the acquisition by XTL (via ZFI) of 37.14% shares in MFS from LSA, as the second leg of the transaction. The net result of the above two acquisitions is that XTL will effectively end up owning 72.05% of the ordinary issued shares of MFS via ZFI.
Madison Financial Services currency grapples with irate creditors that are owed for various investment obligations that have raised potential credit and liquidity risks contagious to the LSA Group. The group resolved to finding an equity partner whose transaction proceeds would help cushion some of the pressures faced.
TERM SHEET STRUCTURE
The term sheet signed between MGK Global Limited (incorporated in Seychelles), MFS, LSA and ZFI provides for acquisition, by XTL, of the 37.14% ordinary shares held in MFS by LSA and the acquisition of 100% of the shares of Enko in ZFI to give a combined shareholding via ZFI of 72.05 % of the ordinary share capital of MFS; acquisition of 100% of the properties held and owned by MAMCo for a total value of U$10,365,521.00, including but not limited to Hillview Estates; Buboni Housing Estate and LSA House in Lusaka; refinancing of existing MFS loan obligations to Enko; refinancing of the obligations of MGEN; and capital injection into MFinance, MAMCo and MLife.
“LSA and ZFI recognize the need to support the continued growth of MFS, through the capital injection to sustain operations of the core units of the company namely Madison General, Madison Finance, Madison Asset Management and Madison General Tanzania to ensure that they can compete effectively, retain market share and continue to grow going forward,” the SENS carried.
About XTL: Xylem Trading (Pty) is a company and investment vehicle incorporated in South Africa with a diversified investment portfolio which includes regulated financial services in Mauritius, Zimbabwe, Mozambique and Seychelles. XTL specializes in commodity trading in fuel and grain in the SADC.
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