Malawi Stock Exchange-listed TNM has called for an Extraordinary General Meeting (EGM) to seek shareholder approval for a major corporate restructuring and capital-raising initiative.
The meeting, scheduled for May 3, 2025 in Blantyre, will present shareholders with several resolutions that could significantly transform the company’s capital structure.
The most notable proposal involves converting TNM’s existing shares from nominal value to no par value shares, followed by authorisation to issue 1.45 billion new shares to raise K30 billion.
Times Business understands that the capital will primarily be used to retire the company’s existing debt obligations.
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According to a published notice, the shares will be offered to three specific subscribers, including Press Corporation plc, which is poised to get 794,711,098 shares; Old Mutual Life Assurance Company Malawi Limited, which is poised to get 483,227,694 shares; and Nico Life Insurance Company Limited, which is poised to get 172,462,153 shares.
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In a response to a questionnaire, TNM Company Secretary Chisomo Governor said the conversion was driven by legal compliance requirements under Section 87 of the Companies Act of 2013.
“To issue additional shares of the same class, as proposed in this transaction, the company must convert all existing shares to no par value shares,” Governor said.
However, the move has sparked mixed reactions from stakeholders.
Chairperson for the Minority Shareholders Association of Listed Companies (Misalico) Central Region chapter Purity Chitalo welcomed the recapitalisation efforts but raised concerns about potential dilution.
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“The issuance of 1.5 billion new shares will dilute the current share price for minority shareholders, and only majority shareholders stand to buy the newly issued shares unlike if it were a rights issue,” Chitalo said.
TNM Chief Executive Officer Michel Hebert defended the approach, stating that the shares were being offered at a 7 percent discount, which is within the 10 percent limit allowed by MSE listing requirements.
“The funds will be used to restructure the balance sheet and to pay down excessively expensive debt so as to unlock both near and long-term value to all shareholders.
“The specific issue for cash is explicitly allowed in the MSE listing requirements. It is subject to limits such as issuing a maximum of 15 percent listed equity securities to avoid excessive dilution of minority shareholders, necessary approvals and compliance with requirements which safeguard interests of all shareholders, including minorities,” Hebert said.
MSE Chief Executive Officer John Kamanga affirmed that the transaction complied with listing requirements, noting that the amount being offered was normal to have a discount and subject to an independent fair and reasonable opinion.
The EGM will also consider amendments to the company’s memorandum of association and a waiver of pre-emptive rights to facilitate the share issuance.
Conversion of shares from nominal to no nominal value means that the shares are based on market value and not as per the set value when they are being issued to the market.
For example, a company may issue shares at nominal value of K1.00 each at its initial issuance but, in this case, shares are issued at a market value as opposed to the nominal value of K1.00.
