What will happen to Crystal Telecom upon the listing of MTN Rwanda on the Rwanda Stock Exchange (RSE)? What will be the fate of its shareholders? These are some of emerging questions following news that MTN Rwanda is set to list its shares on RSE. As MTN Rwanda moves to list shares, 20 per cent stake held by Crystal Telecom will be directly held by the public. While 100 per cent shares of MTN Rwanda will be listed on the stock exchange, the 20 per cent stake held by Crystal Telecom will be available for trading by the public. Crystal Telecom was established as a special purpose vehicle to create an avenue for the public to hold shares in MTN Rwanda. The Board of Directors of Crystal Telecom has recommended that the shareholders of CTL become direct shareholders in MTN Rwanda when the listing happens through a transaction where CTL shall repurchase all its shares from its shareholders in exchange for MTN Rwanda shares as consideration (share swap). The board has proposed that when MTN Rwanda lists, the share swap will be on a 1:1 ratio basis, with each shareholder receiving 1 MTN Rwanda share for every share repurchased by the CTL. The share swap and the approval, therefore, shall be conditional upon the successful listing of MTN Rwanda on the RSE, an announcement by the Board mentioned. “Immediately ahead of the share swap, the Company shall also pay a dividend of any net cash held by the company, net cash being the cash balance minus any outstanding or budgeted costs for completion of the deregistration of the Company,” the board added. The share swap is subject to the approval of 75 per cent of the CTL shareholders in the Extraordinary General Shareholders Meeting (EGM). “The Board engaged Faida Securities Rwanda Ltd, an independent financial advisor who has issued a Fairness Opinion to the effect that the swap and direct ownership of shares in MTN Rwanda as proposed by the Board would be fair and reasonable for the CTL Shareholders,” the board explained. Wrapping up CTL operations If and when MTN Rwanda’s listing is successful and complete and the share swap complete, Crystal Telecom will no longer meet the requirements for a listed company in aspects such as minimum number of shareholders. This will mean that the role of Crystal Telecom as a ‘Special Purpose Vehicle’ has been extinguished as members of the public can now hold MTN Rwanda shares directly. CTL’s board of directors recommended that the firm be delisted from the stock exchange as it will no longer be eligible for listing and does not serve further purpose. “The Board therefore recommends that the company be delisted from the RSE immediately after completion of the share swap process. This recommendation shall be subject to the approval of 75 per cent of CTL shareholders in the EGM to be held on a date in accordance with the Mermarts on the provisions related to notice period or any such waiver granted by CMA (Capital Markets Authority),” the board said in a statement. “The delisting shall thus be conditional upon the successful listing of MTN Rwanda on the RSE and the successful completion of the swap of CTL shares for MTN Rwanda shares.” After the delisting, the board further proposed that the company be de-registered from the Registry of Companies in Rwanda and closure of the company. This will also be subject to regulatory approvals from the Capital Markets Authority in Rwanda and the RSE. MTN Rwanda is expected to list by way of introduction in early 2021. Listing by introduction occurs when a company lists its existing shares on an exchange. Given that said company is listing shares that had already been fully paid for, the aim of listing by introduction is not to raise capital immediately, but could serve the purpose later. MTN Rwanda is one of the country’s most profitable companies having made a profit of about Rwf6.8 billion in profit after tax in 2019 and total revenue of about Rwf125 billion. In 2018, the firm had a profit of Rwf7.7bn.
