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Nelson Gahadza Senior Business Reporter

ARDEN Capital (formerly Brainworks), is set for voluntary liquidation, which will result in the cancellation and delisting of its shares on the Johannesburg Stock Exchange (JSE.

Arden is also selling its logistics company FML, which moves bulk fuel across the region, for US$1 million with the net proceeds earmarked to pay off debt.

The company in June 2021 said it had commenced a process of reviewing its prospects, financial health, strategy, and ability to continue to operate as a listed investment holding company.

“Shareholders are now advised that the board has resolved to propose to shareholders a voluntary liquidation of the company in terms of paragraph 3,85(i) of the JSE Listings requirements and paragraph 105(1)(e) of the Companies Act of Mauritius, which will result in the cancellation and delisting of Arden shares on the JSE,” read part of the circular.

The company noted that in anticipation of the voluntary liquidation, the board had proposed a pro-rata unbundling of all the issued shares it holds in Arden Enterprises Limited (AEL) to shareholders as a first step towards an orderly wind-up of the company’s affairs prior to concluding the envisaged fold up.

AEL is a wholly owned subsidiary through which the company holds all its assets and liabilities, hence after the unbundling, Arden Capital will effectively revert to a shell company, allowing for the orderly voluntary wind-up of the company’s affairs.”

The company noted that to enable the unbundling, in terms of article 16.1.1 of the Company Constitution and under section 63 of the Mauritius Companies Act, a dividend may only be declared out of accumulated profits.

“Accordingly, the board will also propose to shareholders a reduction of the Arden stated capital balance, and to transfer a portion of the stated capital balance to the retained earnings to enable the unbundling,” said the company in a circular.

According to Arden, the company was originally established as a listed investment company through which shareholders could gain exposure to various investment sectors with a focus on investing in Zimbabwe.

The group’s listing was aimed at achieving liquidity for its Shareholders by providing them with a tradeable instrument on an internationally recognised stock exchange and providing the company with a platform through which to raise future funding for the growth of its portfolio.

“From the outset of listing, the company has struggled to achieve liquidity for its shareholders, and the company’s share remains highly illiquid on the JSE.

“The company has also not attracted any additional capital from its JSE listing and has not grown its investor portfolio,” Arden said in the circular.

The company noted that as a result of the ongoing erosion of value for shareholders, coupled with the losses experienced by the group as a result of the Covid-19 pandemic, thereby placing the company in considerable financial constraints, shareholders should consider and approve the voluntary liquidation.

In a separate circular, Arden said Brainworks Petroleum Limited, an indirect wholly-owned subsidiary of the company, had concluded an agreement to sell its 100 percent shareholding interest in FML Logistics to an unrelated third party.

FML is engaged in logistics operations centred predominantly on transporting petroleum products within the Southern African Development Community.

“The parties have agreed that the disposal consideration of US$1 million will be reduced by US$135 300, being the amount of intercompany debt between Brainworks Capital Management (Private) Limited and FML, to a net consideration amount of US$864 700, following which Brainworks Capital Management (Private) Limited will be released from the intercompany debt owing to FML,” the company said.

However, the disposal remains subject to certain conditions precedent, in particular Reserve Bank of Zimbabwe approval.

The disposal is also subject to the completion of conditions subsequent within 120 days of the signature of the disposal agreement.  It will also get consent from the Competition and Tariff Commission and a capital gains tax clearance certificate from the Zimbabwe Revenue Authority.