10th Mar 2016 11:04
LONDON (Alliance News) - Cambria Africa PLC shares rose on Thursday after successfully defending itself against claims its subsidiary had to sell its stake in Zimbabwe's only micro loan processing service.
Cambria Africa shares were up 18% to 0.650 pence per share on Thursday morning.
The investment company's subsidiary, Payserv Africa Ltd, had been defending claims that it had to sell its 51% stake in micro loan processing firm Tradanet following claims made by a fellow shareholder in Tradanet.
Ottonby Trading (Private) Ltd, which holds a minority stake in Tradanet, claimed it had the right to purchase Payserv's stake in the company after a change in control of Cambria Africa, and therefore Payserv, triggered a clause.
Cambria Africa was on the brink of delisting from the London Stock Exchange in early 2015 after the company sold the Leopard Rock Hotel at a price well below expectations that led the value of its assets being significantly reduced.
Cambria Africa felt the costs associated with maintaining an AIM listing was disproportionate given the size of the business following the sale of the hotel.
However, Cambria Africa then raised GBP90.95 million by selling a 50.55% stake in the company to Ventures Africa Ltd, prompting it to keep its listing as it said the access to funding had overridden its reasons for delisting.
However, that changed the control of the company, with Venture Africa still holding that same stake to date.
Ottonby Trading, the minority shareholder in Tradanet, claimed that triggered a clause that meant it had the right to purchase Cambria Africa's subsidiary's 51% stake in Tradanet, kickstarting an arbitration process that has ultimately failed.
"The company announces that the arbitration process has been concluded with the arbitrator granting an award in favour of Payserv Africa and confirming that the VAL Subscription did not trigger any right held by the minority shareholder to acquire Payserv's 51% interest in Tradanet," said Cambria Africa Thursday.
Cambria Africa was confident throughout the process the claim would be unsuccessful, but the news is still significant as Tradanet contributed USD303,000 to Cambria Africa's overall earnings in the year to the end of August, about 37% of Cambria Africa's overall pretax profit in the period, which amounted to USD820,000.
The company will be looking to put the ordeal behind it as Chief Executive Samir Sasha, who only took the role August 2015, looks to guide the company back to profitability and restore shareholder value following several knocks.
By Joshua Warner; [email protected]; @JoshAlliance
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