Major International Business Headlines Brief::: 27 May 2019

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Major International Business Headlines Brief::: 27 May 2019

 


 

 


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*  S&P keeps South Africa in 'junk' status, sees post-election reforms

*  Botswana cancels 100mw solar power tender, plans to reissue

*  MTN Nigeria listing being investigated by Nigerian financial crimes
agency

*  South Africa's Eskom CEO resigns for health reasons

*  CEO of Kenya Airways resigns, to leave at year end - internal memo

*  Kenya 2019-20 coffee output to plunge to more than 50-yr low -USDA

*  Old Mutual CEO exits in 'conflict of interest' board dispute

*  Vedanta-Konkola liquidation case adjourned to June 4-lawyer

*  Barrick's offer for control of Acacia Mining reflects risk- CEO

*  South Africa's rand recovers as lending rates seen steady for longer

*  Why Huawei's Google woes worry Africa

*  Can Sir Philip Green save his retail empire?

*  Harvey Weinstein 'to settle with accusers for $44m'

 


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S&P keeps South Africa in 'junk' status, sees post-election reforms

JOHANNESBURG (Reuters) - S&P Global Ratings kept South Africa’s foreign- and
local-currency credit ratings in “junk” territory with a stable outlook late
on Friday, saying the new government was expected to focus on reforms to
revive the economy.

 

Newly elected President Cyril Ramaphosa has pledged to rekindle growth by
fixing state firms, easing policy uncertainty and luring back foreign
investment that dried up in the last decade under his predecessor Jacob
Zuma.

 

S&P kept the country’s long-term foreign-currency rating at ‘BB’, while the
long-term local-currency rating was held at ‘BB+’. Both carry a stable
outlook. The ratings agency made the same assessment in November 2018 after
slashing the rating in 2017.

 

Fitch Ratings also rates Pretoria’s debt as junk. Of the top three ratings
firms only Moody’s classifies the sovereign as investment-grade.

 

“The stable outlook reflects our view that, with the elections now over, the
South African government will pursue some reforms and attempt to improve
economic growth and try and contain fiscal deficits,” the firms said in a
statement.

 

Ramaphosa was sworn in as South Africa’s president on Saturday, vowing to
create jobs and tackle deep-rooted corruption that has strangled economic
growth.

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

Botswana cancels 100mw solar power tender, plans to reissue

GABORONE (Reuters) - The Botswana Power Corporation (BPC), has cancelled a
tender in which it was seeking private investor partners to build a 100MW
solar power plant, and plans to reissue the tender to make the project fully
private owned, the state-owned utility said on Saturday.

 

“The project which was initially structured as a joint venture between BPC
and private producers will now be implemented through independent power
producers, meaning it will be 100 percent privately owned,” the BPC said in
a statement.

 

“A new tender is anticipated to be floated by end of June 2019,” said the
BPC.

 

The tender in the southern African country had received 166 bids from both
local and international power producers.

 

The state power supplier forecasts energy demand to more than double to
1,359MW by 2035 from around 600MW currently, and is modernising its power
grid and sources to meet the surge.

 

 

MTN Nigeria listing being investigated by Nigerian financial crimes agency

ABUJA (Reuters) - MTN Nigeria said on Saturday it is under investigation by
the Nigerian financial crimes agency over its listing last week, although it
“has not been accused of any wrongdoing” by the Economic and Financial
Crimes Commission.

 

The listing of MTN Nigeria, a unit of South African telecoms firm MTN Group,
made it the second-largest firm on the Nigerian Stock Exchange, and since
then its share price has risen from 90 naira to 140 naira.

 

A spokesman for Nigeria’s financial crimes agency was not immediately
available for comment.

 

“We received all regulatory approvals required to list our shares,” MTN
Nigeria said in a statement. “We are co-operating fully with the
authorities.”

 

 

 

South Africa's Eskom CEO resigns for health reasons

JOHANNESBURG (Reuters) - The chief executive of South Africa’s struggling
power utility Eskom, Phakamani Hadebe, said on Friday he was stepping down
for health reasons after leading efforts to stabilise the highly indebted
state firm.

 

Eskom is regularly cited by ratings agencies as one of the main threats to
the country’s creditworthiness and economic growth.

 

“It is no secret that this role comes with unimaginable demands which have
unfortunately had a negative impact on my health. In the best interests of
Eskom and my family, I have therefore decided to step down,” Hadebe said in
a statement.

 

Hadebe added that he was “humbled and grateful to have contributed towards
the stability for an organisation that is critical for our economy.”

 

He will step down at the end of July this year, the company’s board said.
There was no mention of an interim CEO.

 

The government appointed Hadebe as chief executive in May 2018, ending a
string of interim appointments that stretched back to 2016.

 

Eskom board chairman Jabu Mabuza said Hadebe should be commended for his
“dedication and passion”.

 

Eskom faces generation capacity constraints and South Africa has been
plagued by power cuts in the past year, undermining broader efforts to
kick-start growth.

 

 

The economy grew an estimated 0.8 percent in 2018 after recovering from
recession. Growth is forecast at 1.5 percent this year, and one factor in
hitting that target will be how the government manages Eskom’s
restructuring.

 

Battling to preserve Pretoria’s last investment-grade credit rating,
President Cyril Ramaphosa has pledged to restructure Eskom with a 23 billion
rand ($1.60 billion) a year bailout over the next three years.

 

($1 = 14.4193 rand)

 

 

 

CEO of Kenya Airways resigns, to leave at year end - internal memo

NAIROBI (Reuters) - The chief executive of Kenya Airways has resigned, an
internal memo seen by Reuters on Friday said, a potentially destabilising
development for the national flag carrier that has been struggling to
recover from years of financial losses.

 

In the statement, Sebastian Mikosz said the decision was a personal one and
he would leave at the end of the year.

 

“I have made the decision to shorten my contract term and I have decided to
resign on personal grounds effective December the 31st of this year,” said
Mikosz, who was appointed in June 2017.

 

The carrier, which is 48.9 percent owned by the government and 7.8 percent
by Air France-KLM, restructured $2 billion of debt last year. It is planning
new routes as it tries to become profitable.

 

Kenya Airways reported revenues of 114.45 billion shillings ($1.13 billion)
for the 12 months to Dec. 31, up from 106.17 billion a year earlier. Its
pretax loss for the period narrowed to 7.59 billion shillings from 9.44
billion.

 

Mikosz said he believed it was the ideal time to begin the transition
process to find a new leader who would continue the turnaround initiatives
the airline began 3 years ago.

 

$1 = 101.1500 Kenyan shillings)

 

 

 

Kenya 2019-20 coffee output to plunge to more than 50-yr low -USDA

NEW YORK (Reuters) - Kenyan coffee production in 2019-20 is seen dropping to
650,000 bags, the U.S. Department of Agriculture (USDA) attache in Nairobi
said, representing the country’s lowest production in over 50 years,
according to historical USDA data.

 

Farmers in Africa’s fifth-largest coffee producing country, grappling with
the effects of drought and low global prices, are increasingly looking to
grow other crops, the attache report said. The 2019-20 production levels
represent a 13% drop from the levels seen in 2018-19 and the lowest figures
for Kenya since 1962-63 according to USDA production data.

 

The decline in output is expected to send coffee stocks, which in Kenya are
held by millers, agents, and exporters, to a record low in 2019-20, the
report said.

 

Last month, international coffee prices fell to a 13-1/2-year low, but have
languished near historic lows for several months.

 

Low prices make it difficult for farmers to take care of their crops and
fend off pests and disease. Meanwhile, the poor governance of Kenyan
marketing cooperatives and a marketing structure that forces farmers to
personally shoulder a large amount of risk is also a major problem for the
sector, the report said.

 

 

 

Old Mutual CEO exits in 'conflict of interest' board dispute

JOHANNESBURG (Reuters) - Old Mutual’s chief executive left on Friday after
what South Africa’s second-biggest insurer described as a “breakdown in
trust” with Peter Moyo, who cited a disagreement over how it should engage
with an investment firm he founded.

 

Moyo’s sudden exit, which knocked the insurer’s shares, was related to a
“material breakdown of trust and confidence” over a conflict of interest,
Old Mutual said as shareholders attended its annual general meeting.

 

“When one is aware of a conflict of interest it is fundamentally important
it be managed,” Chairman Trevor Manuel told shareholders after Old Mutual
confirmed Moyo’s departure.

 

“To the best of our ability we tried to manage it, but sometimes these
things become unmanageable and untenable and it reached that point,” former
South African finance minister Manuel said at the Old Mutual AGM in
Johannesburg.

 

Moyo, who took the helm at newly-listed Old Mutual less than a year ago,
said that the row related to how different unnamed parties thought Old
Mutual should engage with NMT Capital, which he founded and in which an Old
Mutual subsidiary is the only institutional investor.

 

“There is actually absolutely no wrongdoing on my part,” Moyo said, adding
that the disagreement was the result of differences over the approach to
engagement rather than the relationship itself.

 

NMT is an investment holding company set up in 2002, with investment in
mainly South African companies in sectors including energy, mining, real
estate and financial services.

 

“That relationship has always been there from the day I started and it was
properly disclosed,” Moyo told Reuters.

 

An Old Mutual spokeswoman did not respond to Reuters requests for immediate
comment on whether the relationship between NMT Capital and Old Mutual Life
Assurance Company, the subsidiary, was related to the dispute with Moyo.

 

‘BREAKDOWN OF TRUST’

The insurer had said in the earlier statement that various engagements
between Moyo and the board had resulted in the breakdown in trust between
the two sides.

 

Moyo rejoined Old Mutual in 2017, initially as head of its emerging markets
division, before the former conglomerate’s main African financial services
business was split off in a disentanglement of the 173-year-old group’s
structure.

 

Both Old Mutual’s Johannesburg and London-listed shares fell 5% on news of
Moyo’s suspension. The shares were trading at 21 rand per share at 1330 GMT
in Johannesburg, down 3.23%.

 

Chief Operating Officer Iain Williamson has taken over as acting CEO, Old
Mutual said.

 

Since its listing as a separate business in June 2018, Old Mutual has worked
to hone its strategy as a stand-alone business and parent company to what
remains of Old Mutual Plc.

 

Old Mutual announced a 2 billion rand ($139 million) share buyback in March
in a bid to placate shareholders following an almost one-third drop in the
share price after its listing.

 

($1 = 14.4076 rand)

 

 

 

Vedanta-Konkola liquidation case adjourned to June 4-lawyer

LUSAKA (Reuters) - A court hearing between Vedanta, its Konkola Copper Mines
business (KCM) and the Zambian government over control of KCM, was adjourned
on Friday until June 4, a lawyer said.

 

Vedanta is fighting the government’s attempt to seize KCM, which is one of
the biggest employers in Zambia, Africa’s second largest copper producer.

 

The case involving KCM has stirred up concerns in the mining industry about
rising resource nationalism in Africa, where Tanzania and Democratic
Republic of Congo have been seeking a greater share of mining revenues.

 

Friday’s court action followed an order earlier in the week to name a
Zambian law firm as a liquidator of KCM.

 

Lawyer for the liquidator Jonas Zimba told reporters on Friday the case had
been adjourned because Vedanta had not served documents.

 

Vedanta’s lawyer, Michael Mundashi, declined to comment.

 

The Zambian government has said it is not seizing private assets or breaking
any laws. It has cited breaches of KCM’s licence to operate, the company’s
financial situation and said it was talking to three prospective investors,
although it has declined to name them.

 

Vedanta is the majority shareholder of KCM, while the Zambian state arm
ZCCM-IH holds around 20 percent.

 

Vedanta is seeking to ensure it is part of the KCM liquidation proceedings,
which until now had not involved the main shareholder.

 

In a statement late on Thursday, Vedanta said it would fully defend its
legal rights and has “serious concerns about the intentions of the
applicants and the procedures that were followed by ZCCM-IH as a
representative of the government to obtain a provisional liquidation order”.

 

Vedanda listed a series of concerns including that the petition for winding
up KCM dealt with a “broad range of issues relating to KCM not at all
related to the solvency of the business”.

 

The company also said a number of expatriate employees and contractors had
been prevented from leaving the country.

 

 

 

Barrick's offer for control of Acacia Mining reflects risk- CEO

LONDON/TORONTO (Reuters) - Barrick Gold Corp’s offer to buy the rest of
Acacia Mining reflects the risk the Canadian-listed mining company faces in
increasing its exposure to Tanzania, its chief executive said on Friday.

 

Mark Bristow, chief executive officer of Barrick Gold, speaks during an
interview at the Investing in African Mining Indaba conference in Cape Town,
South Africa February 5, 2019. REUTERS/Mike Hutchings

Barrick, which owns 63.9% in London-listed Acacia, on Tuesday proposed to
buy out the minority shareholders as part of efforts to resolve a 2017 tax
dispute with the Tanzanian government.

 

Barrick’s offer values Acacia at $787 million, a near 11% discount to its
closing share price on Tuesday and 42% below Barrick’s own audited valuation
of Acacia’s assets in its 2018 annual report.

 

But Bristow said the offer was fair as Barrick was taking on more risk.

 

“We have had a good look at the assets and ... the (agreement with the
Tanzanian government), which still has to be finalised, comes with risk,”
Barrick CEO Mark Bristow said in an interview with Reuters.

 

“Tanzania is considered a higher risk jurisdiction and (Acacia) hasn’t been
functioning as a company should be, otherwise we wouldn’t be interfering in
it,” he said.

 

Barrick clinched a framework deal with Tanzania in 2017 that required Acacia
to pay $300 million, hand over a 16% stake in its three gold mines and split
the economic benefits from its operations.

 

“I can assure you there’s nothing else,” Bristow said. “No side agreement or
other agreement, which we’re trying to exploit.”

 

Acacia declined to comment.

 

Barrick’s offer follows two years of wrangling over a $190 billion Tanzanian
tax bill, which has since been reduced to $300 million.

 

Barrick negotiated with the Tanzanian government on the tax issue on
Acacia’s behalf. But Acacia has blamed Barrick for being shut out of the
talks, while Barrick has accused Acacia of failing to cooperate.

 

Barrick said on Tuesday the Tanzanian government had refused to settle
directly with Acacia, prompting it to make the offer to take full control
the miner.

 

Shareholders and analysts have said Barrick’s offer was too low, but also
said that the Tanzanian government’s stance limited Acacia’s options.

 

One Acacia shareholder told Reuters he was sceptical that Barrick had not
made a firm offer but only an indicative one.

 

Analysts at Jefferies said: “An outcome whereby Acacia could return to a
normalised operating environment appears increasingly unlikely and we
believe this was the trigger to Barrick proposing the offer.”

 

Asked whether there were alternative plans to solving the dispute Bristow
said: “If we had a better plan, we would have tabled it.

 

“This is not an opportunity to exploit a situation, it’s a genuine attempt
to mediate an outcome to a situation which has become extremely emotional
and which is holding up the mining industry in Tanzania,” he said.

 

 

South Africa's rand recovers as lending rates seen steady for longer

JOHANNESBURG (Reuters) - South Africa’s rand firmed early on Friday,
regaining some ground after dropping a day earlier, when the central bank
kept lending rates unchanged in a decision that divided policymakers.

 

At 0630 GMT the rand was 0.48% firmer at 14.4200 per dollar compared to a
close of 14.4900 overnight in New York.

 

The Reserve Bank’s five-member policy committee voted 3-2 to keep rates
steady at 6.75%, saying that while inflation and inflation expectations were
close to the middle of the bank’s 3% to 6% target range, they had not yet
settled there.

 

“A mixed voting decision often signals an oncoming change in policy. We
believe that inflation is likely to be slightly higher than the MPC expects
as the impact of the rand and administered prices could be higher than
currently anticipated,” analysts at Nedbank said.

 

Despite moderating inflation, the rand and South African bonds continue to
offer a relatively healthy yield return.

 

Bonds were also firmer on Friday, with the yield on the benchmark paper due
in 2026 down 4 basis points to 8.34%.

 

 

 

Why Huawei's Google woes worry Africa

Google's decision to withhold its Android software from Huawei is being seen
as the beginning of a technology cold war that could compel African
countries - in the future - to choose between US and Chinese technology,
analysts have told the BBC.

 

Most Africans connecting to the internet today are likely to be using a
Chinese smartphone, powered by a Chinese-built network, and at least half of
the time, it was built by Chinese tech giant, Huawei.

 

"Huawei built huge swathes of Africa's current IT infrastructure and if the
US is successful in crippling the company, the aftershocks could be very
painful for Africa's burgeoning tech sector that now relies on a company in
Washington's crosshairs," Eric Olander, from the South Africa-based China
Africa project, says.

 

US President Donald Trump has been leading a public campaign urging American
allies to cut ties with Huawei, saying the company's technology, among other
things, was a security risk because it allowed the Chinese government to
spy.

 

The company has repeatedly denied the claims.

 

The US campaign could spark what Eric Schmidt, Google's former CEO,
predicted would be the inevitable bifurcation of the internet, between a
"Chinese-led internet and a non-Chinese internet led by America".

 

If this happens, Africa should not take sides, Harriet Kariuki, a
Sino-African relations specialist, told the BBC.

 

"It's not our battle, we should instead focus on what works for us," she
said.

 

African countries should instead come together to educate people about what
is at stake, and hopefully agree on an EU-type data protection law to
protect African consumers, Ms Kariuki said.

 

"This is probably the time Africa considers developing its own technologies
relevant to its market instead of being passive consumers. I want to see
African countries come together and push back against this creeping digital
colonisation," she told the BBC.

 

'The African Union hack'

While the recent concern about Huawei has been focused on communications
networks in the West, there are also allegations of a previous security
breach in Africa.

 

Critics of Huawei operations point to a report in January 2018 in French
newspaper Le Monde that found that the computer system at the African Union
headquarters in Ethiopia's capital, Addis Ababa, which was installed by
Huawei, had allegedly been compromised.

 

The discovery found that for five years, between the hours of midnight and
0200, data from the AU's servers was transferred more than 8,000km away - to
servers in Shanghai.

 

The allegations were denied by the African Union and Chinese officials.

 

African governments, even those with close security relationships with the
US, have mostly sat out of the debate about Huawei - and the reasons are
obvious.

 

Huawei runs a vast operation in Africa including being a major seller of
smartphones.

 

It has built most of Africa's 4G internet network, Cobus van Staden, a
Senior China-Africa researcher at the South African Institute of
International Affairs, told the BBC.

 

The CEO of Kenya's telecom giant Safaricom Bob Collymore said Huawei had
been a "great partner for many years".

 

"We would like to stick with our partners as much as we can, however there
can be some practical difficulties if the embargo is on American companies
working with Huawei because it is an interconnected business," he said in a
recent speech.

 

About Huawei in Africa:

 

*         Launched Africa operations in 1998 in Kenya

*         Operates in 40 countries

*         Built at least 50% of Africa's 4G network

*         Providing technology for smart city projects

*         Runs several research partnerships

*         Fourth major smartphone seller

Sources: Australian Strategic Policy Institute, Huawei, IDC

 

The company, which opened its first office in Africa in 1998, is also in
pole position to win contracts to roll out 5G network on the continent.

 

The super-fast network is touted as the internet iteration that will power
"Internet of Things" technologies, smart cities, autonomous vehicles, and
more.

 

"The scaling of Huawei's presence on the continent has been made possible by
being the first company to exploit the potential of the IT economy in
Africa, and having the wherewithal to support its projects," Mr Van Staden
said.

 

"China's tied-aid conditions that requires African governments to work with
Chinese companies, has also helped it," he added.

 

You may also be interested in:

 

Can Chinese migrants integrate in Africa?

Is China burdening Africa with debt?

Huawei's Android loss: How it affects you

Inside Africa's WhatsApp's gated communities

According to technology research firm IDC, Huawei is currently the fourth
biggest smartphone seller in Africa, behind another Chinese company,
Transsion, which makes the Tecno and Infinix brands, and Samsung.

 

All four brands currently use Google's Android operating system.

 

Huawei's dominance and its relationship with governments in Africa could
come in handy if the so-called tech cold war between China and the US
threatens its African operations.

 

"Africa is the last tech market in the world and dominance in it would be
key," Mr Van Staden said.

 

"Some people, like here in South Africa, where Huawei is a major player, are
worried about being locked out of the Google ecosystem but Huawei could use
the current situation to change the game".

 

"Few US companies know how to work in the African market, to make relevant
products for consumers on the continent. Huawei, could use the current
situation to change the calculus and develop softwares in languages that
truly serves the African market," Mr van Staden said.

 

Most Africans are online today thanks to cheap Chinese phones and many are
more concerned about the price of the gadgets and other features - like a
dual SIM-card phone, and long battery life - than an operating system, he
added.

 

US internet vs China internet

Iginio Gagliardone, author of China Africa and the Future of the Internet,
agreed that the ongoing tussle between China and the US could just be what
pushes Huawei to increase the use of its own software to support its
burgeoning smartphone market.

 

But he told the BBC it wouldn't be cheap or easy to build this capacity.

 

It would also be difficult to export the closed internet model from China,
which would mean requiring customers to use Baidu rather than Google and
Sina Weibo instead of Twitter.

 

However, WeChat, a multipurpose app that combines social media platforms,
messaging and mobile payments, could take off in Africa.

 

Huawei is the fourth biggest seller of smartphones in Africa in a market
dominated by Android-powered phones

So will Africa be forced to make a choice?

 

"African countries should not choose a side, in fact it would be interesting
if during this tech cold war it could form a non-aligned movement that looks
after its interests," Mr Gagliardone said.

 

His research, despite suspicion, has not found any evidence that China has
been actively urging countries in Africa to adopt its censored version of
the internet.

 

"What you see is that China is providing products that have been requested
by African governments," Mr Gagliardone said.

 

However, Mr Gagliardone thinks that China, in its push to protect its
businesses, could leverage its relationship with African governments to
develop protocols that give its companies an advantage over the West.

 

"I, however, don't see the consumer market being affected, I still see
consumers continue to have access to different products to choose from," he
said.

 

The ensuing tech cold war is an opportunity and the continent should not be
forced to pick a side, according to Ms Kariuki.

 

However, according to Fazlin Fransman, from South Africa's Moja Research
Institute, "the current internet and technology boom [in Africa] is in
significant part because of the investment of Chinese tech companies.

 

Africa, in her view, has already picked a side, and it is China.--BBC

 

 

 

Can Sir Philip Green save his retail empire?

High Street retail chain Arcadia claims to be in serious trouble, facing
what it calls "significant liquidity issues".

 

The answer, it believes, is a Company Voluntary Arrangement (CVA), a series
of proposals to its creditors.

 

But critics say it raises as many questions as it answers and fails to
address key branding and operational problems in the company.

 

Arcadia, owned by Lady Tina Green, the wife of chairman Sir Philip Green,
says sales in its stores open more than a year fell 9% in 2018-19.

 

Earnings this year are expected to be £30m, compared with £219m two years
ago.

 

Faced with fixed charges of £100m a year, the group says it is struggling to
pay its way.

 

What does the CVA do?

A CVA is a renegotiation of terms with a company's creditors as part of an
insolvency procedure.

 

Arcadia's CVA is a complicated, many-headed beast. For a start, it is not
one, but seven arrangements relating to different parts of the group.

 

In theory, if one CVA fails, only one part of the company would go into
liquidation. The rest would carry on trading.

 

In practice, Arcadia says that the companies are so interlinked that the
whole group is unlikely to survive without all seven CVAs being approved.

 

The CVAs propose:

 

*         The closure of 23 stores

*         The renegotiation of rents on 194 stores

*         Increasing net pension contributions over three years

*         Investing £50m

*         Giving landlords a 20% stake in Arcadia, but only if it is sold

*         Tina Green, owner of Arcadia with her husband, Arcadia chairman
Sir Philip Green

What does it solve?

The company says it is paying £170m annually in rent. It estimates the
leases are "over-rented" by 30% on average across the portfolio.

 

But most analysts believe that bill was coming down anyway.

 

Richard Hyman, an independent retail consultant, says Arcadia has been
shrinking for years, closing stores as leases expired, and he said more were
expected to close in the next two years for the same reason.

 

The CVA also proposes closing 23 stores, just 4% of Arcadia's portfolio.

 

Mr Hyman said: "I find it hard to get my head round the idea that closing 23
stores in a group the size of Arcadia is going to make the difference
between life and death."

 

Ed Cooke, chief executive of retailers' trade association Revo, says it
demonstrates the problems are not as severe as Arcadia makes out: "There's
no suggestion here that Arcadia is really insolvent."

 

Arcadia at a glance:

*         Owner: Lady Tina Green, wife of Arcadia' chairman, Sir Philip
Green (67).

*         Brands: Burton, Dorothy Perkins, Evans, Miss Selfridge, Outfit,
Topshop, Topman and Wallis

*         Outlets: 566 UK stores, but a total of 2,100 outlets including
in-store concessions and franchises

*         Countries: Predominantly UK, Ireland, the Channel Islands, Isle of
Man, the US, Australia, the Netherlands and Germany

*         Turnover: £1.8bn

*         Employees: 18,000 in the UK

*         How did Arcadia get into trouble?

No-one disputes the company is in poor shape. It says it has suffered from
the malaise affecting the whole High Street - higher business rates, the
rising national living wage and the fall in the value of the pound, which
has put up the cost of imported goods.

 

But Arcadia has problems of its own making, which a CVA does little to
address and are largely to do with underinvestment.

 

Many date the problem to 2005 and the £1.2bn dividend paid out of Arcadia's
parent company, Taveta, to the Green family.

 

Chloe Collins, senior retail analyst at GlobalData, says Arcadia's brands
are tired and out of date: "Even Topshop, which used to be Arcadia's star
player, has lost appeal among fashion shoppers, thanks to tough competition
from the likes of Zara, Primark and H&M, as well as online "pure plays" such
as ASOS, PrettyLittleThing and boohoo.com."

 

"Any attempt to pay for an increase in store standards would be spread too
thinly to make up for years of underinvestment."

 

Mr Cooke believes CVAs generally are being used to manipulate credit
arrangements.

 

He said: "The management stays in place. the business stays the same. Not
surprising the landlords are turning round and saying, 'Hang on, why do I
have to take a hit when this badly managed business is getting a break?'"

 

Will the creditors agree?

The CVAs have to be approved by 75% of the creditors. Without that approval,
the company goes into liquidation.

 

In most CVAs, the creditors are usually banks or pension funds, so the
landlords find themselves outvoted and their rental income cut. In this
case, most of the seven CVAs are linked to the properties and the landlords'
votes will be the ones that count.

 

The landlords have also managed to persuade Arcadia to increase their
potential stake in the company from 10% to 20%. The equity can only be
realised if Arcadia is sold.

 

 

Clare Kennedy, director at consulting firm AlixPartners (which are not
involved in Arcadia's CVA), explained: "The landlord's argument is that they
should be compensated because they have been compromised in order to create
value in the company proposing the CVA, and therefore they should benefit
from any upside."

 

Some of the landlords have been reported as wanting as much as a 40% stake
in the company, but in the end, their approval of the CVA depends on how
much of a cut they are prepared to take on their rental income.

 

PJT, the investment bank negotiating with Arcadia on behalf of a group of
landlords, said in a statement: "There have been substantial improvements
made to the CVA... which benefit all landlords, but there are still areas
that need further clarity."

 

What about employees' pensions?

Creditors for one of the seven CVAs, which the company calls a "critical
entity", are not landlords but pension funds.

 

For the purposes of a CVA, the funds are treated as creditors under the
control of the Pension Protection Fund (PPF).

 

Two years ago, Arcadia agreed to double the pension scheme deficit recovery
contributions to £50m a year for 10 years, to repair a £1bn hole in the
scheme.

 

Under the CVA, that £50m contribution would be halved.

 

But Lady Green has committed to pay £25m annually into the funds over three
years, plus an additional £25m. On Friday, Frank Field MP urged Sir Philip
Green to use his own money to support the pension fund.

 

So the CVA in effect cancels the recovery plan and replaces it with a
slightly more generous one for three years, after which, according to a
company spokesman, contributions are "to be renegotiated".

 

According to John Ralfe, an independent pension consultant, there is some
relief that pension contributions would be increased, since some analysts
had expected a cut.

 

He said: "When we thought that the contributions were going to be cut, we
thought that's never going to be allowed. But with the increase in
contributions, it stands a good chance of being approved."

 

And after three years? Mr Ralfe is sanguine, adding that by then
renegotiation was not unreasonable, since the pensions would have to be
re-valued anyway.--BBC

 

 

 

Harvey Weinstein 'to settle with accusers for $44m'

Disgraced film producer Harvey Weinstein and his former studio's board
members have reached a tentative deal with some of the women who accuse him
of sexual misconduct, US media report.

 

Lawyers said the settlement to resolve civil lawsuits and compensate alleged
victims was worth about $44m (£34.7m).

 

Mr Weinstein denies sexually harassing or abusing over 75 women.

 

He will stand trial in New York in June on criminal charges brought by two
women, including rape.

 

Adam Harris, a lawyer for the studio co-founder Bob Weinstein told a judge
that "an economic agreement in principle" had been reached, the Associated
Press news agency reports.

 

How the Harvey Weinstein scandal unfolded

Harvey Weinstein's accusers

The horror of Weinstein's casting couch

He added: "I personally am very optimistic."

 

Mr Weinstein's team later told the Wall Street Journal that the size of the
settlement would be approximately $44m.

 

Actress Ashley Judd, one of the first women to come forward, tweeted that
her separate legal case against Mr Weinstein was ongoing and that she
intended to take him to trial.

 

Who is Harvey Weinstein?

The 67-year-old is one of Hollywood's most famous producers and has worked
on a number of award-winning films, including Shakespeare in Love, The
King's Speech and The Artist.

 

In total, the films he worked on have generated over 81 Oscars since 1999
and founded the Miramax entertainment company in the 1970s, which initially
focused on art-house films.

 

In 2005, he split from Miramax and founded Weinstein Co, alongside his
brother Bob.

 

In 2017, Quartz reported that Mr Weinstein had become so powerful in
Hollywood that he had been thanked as many times as God in Oscar acceptance
speeches.

 

How did the scandal unfold?

In October 2017, the New York Times published a story detailing decades of
allegations of sexual harassment against Harvey Weinstein.

 

Actresses Rose McGowan and Ms Judd were among the first women to come
forward.

 

The accusations include forcing women to massage him and watch him naked. He
also allegedly promised to help some women advance their careers in return
for sexual favours.

 

The film producer issued an apology acknowledging he had "caused a lot of
pain" - but denied allegations that he harassed female employees over nearly
three decades.

 

The outcry against Mr Weinstein led to the #MeToo movement, which has seen
hundreds of women accusing high-profile men in business, government and
entertainment of sexual abuse and harassment.

 

What has #MeToo actually changed?

As the accusations mounted, his company Weinstein Co dismissed him and filed
for bankruptcy.

 

What would be in the deal?

 

The $44m sum would be divvied among a number of accusers, their attorneys
and attorneys for some of the defendants.

 

The accusers, their lawyers, as well as former Weinstein Company employers
and creditors would have $30m split among them, according to US media
reports. The remaining $14m would be allocated for the legal fees of Mr
Weinstein's associates, including former board members of his production
company who were named as defendants in lawsuits.

 

The names of the women involved in the settlement have not been released.

 

The objective of the deal is to reach a global settlement of all civil suits
filed against Mr Weinstein in the US, UK and Canada, the Wall Street Journal
reported.

 

Some of the plaintiffs involved in the deal have balked at the settlement
amount, potentially undermining the deal, Variety reported.

 

Mediation is expected to continue next week. So far, there have reportedly
been more than 11 separate mediation sessions between the parties, amounting
to about 133 hours. A 15 May court filing described the process as "highly
adversarial".

 

The settlement is a civil matter so will have no bearing on the pending
criminal cases against the former movie mogul.

 

Mr Weinstein is due to go on trial in New York on 3 June on five charges of
sexually assaulting two women. He has pleaded not guilty and denied all
allegations of nonconsensual sex.

 

If found guilty, he could spend the rest of his life in prison.--BBC

 

 

 

 

 

 

 

 

 


 

 


 

INVESTORS DIARY 2019

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

Africa Day

 

25 May 2019

 


Dairibord

AGM

Steward Room, Meikles

31 May 2019, 12pm

 


Lafarge

AGM

Manresa Club, Arcturus

05 June 2019 , 12pm

 


CBZ

AGM

Stewart Room, Meikles

05 June 2019 , 3pm

 


 

 

 

 

 


 

 

 

 


 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
Faith Capital (Pvt) Ltd for general information purposes only and does not
constitute an offer to sell or the solicitation of an offer to buy or
subscribe for any securities. The information contained in this report has
been compiled from sources believed to be reliable, but no representation or
warranty is made or guarantee given as to its accuracy or completeness. All
opinions expressed and recommendations made are subject to change without
notice. Securities or financial instruments mentioned herein may not be
suitable for all investors. Securities of emerging and mid-size growth
companies typically involve a higher degree of risk and more volatility than
the securities of more established companies. Neither Faith Capital nor any
other member of Bulls ‘n Bears nor any other person, accepts any liability
whatsoever for any loss howsoever arising from any use of this report or its
contents or otherwise arising in connection therewith. Recipients of this
report shall be solely responsible for making their own independent
investigation into the business, financial condition and future prospects of
any companies referred to in this report. Other  Indices quoted herein are
for guideline purposes only and sourced from third parties.

 


 

 


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