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Shoprite Said to Offer Buyback of Zambian Shares

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Oct. 25 (Bloomberg) -- Shoprite Holdings Ltd., Africa’s biggest grocer, offered to repurchase shares trading on the Lusaka Stock Exchange from Zambian investors to settle a dispute, two people familiar with the matter said.

Shoprite offered to buy the securities at a 25 percent discount to the price on the Zambian bourse, where the Cape Town-based company has a secondary listing, one of the people, who asked not to be identified because talks are private, said. The proposal was rejected because it was too low, the person said today by phone from Lusaka, Zambia’s capital. Sarita Van Wyk, a Cape Town-based spokeswoman for Shoprite, said she wasn’t immediately able to comment.

The retailer is suing some shareholders of its Zambian unit in a bid to reverse the purchase of shares now worth more than 302 million rand ($31 million). Shoprite, in papers filed in the Lusaka High Court in July, said its representative in Africa’s largest copper-producing nation illegally sold the shares at a discount to the local pension funds of companies including Standard Chartered Plc, Standard Bank Group Ltd., Sandvik AB, and SABMiller Plc.

Shoprite shares closed unchanged at 63 kwacha ($11.78) on Sept. 20 in Lusaka, according to data compiled by Bloomberg, a 36 percent discount to the securities in Johannesburg, where the stock is mostly traded. The South African-listed equities have dropped 12 percent this year after gaining 50 percent in 2012.

Shareholder Talks

The case was adjourned until Oct. 28 to allow Shoprite and the investors to start talks that “may result in the resolution of the dispute,” Judge Flavia Chishimba wrote in court papers dated Sept. 18.

Shoprite’s shares have traded on the Lusaka Stock Exchange since February, 2003. It has more Shoprite stores in Zambia than any other country except South Africa, according to the retailer’s 2013 annual report. Shoprite competes in Zambia with the Netherlands-based Spar International and Pick n Pay Stores Ltd., another South African retailer.

Shoprite’s Zambian representative director, Lewis Chisanga Mosho, sold more than 1.67 million of the retailer’s shares at discounts of as much as 57 percent of Johannesburg Stock Exchange price, according to court papers filed by Shoprite. This was against his mandate and unlawful, the company said.

Mosho did not answer a call to his mobile phone today. An e-mail sent on Oct. 15 seeking comment was returned as his message box was full.

Legal Abuse

The case before the Lusaka High Court is an abuse of the legal process because Shoprite has already tried to sue Mosho and Lewis Nathan Advocates, where he was a partner, at the Kitwe High Court over the sales, according to a filing by Ventus Legal Practitioners.

The Lusaka-based law firm, which represents some of Shoprite’s shareholders, asked the court to dismiss the retailer’s case in papers filed July 29, which Shoprite opposed Sept. 16.

Blackstar Group SE, a Luxembourg-based investment company, is part of the group fighting Shoprite’s attempts to reverse the share trades, the company said Sept. 30. Andrew Bonamour, chief executive officer of the the company’s investment advisory business, declined to comment when reached by phone today.

Shoprite increased the wages of its lowest paid Zambian workers by 34 percent above the minimum wage for their job levels, Robert Musanje, president of National Union of Commercial and Industrial Workers, said by phone on Oct. 23. The retailer on Oct. 16 reversed a decision to fire about 2,200 striking workers after government pressure, spokeswoman Van Wyk said on Oct. 18.

The shareholder case is Shoprite Holdings Ltd. and Shoprite Checkers Ltd. v Saturnia Regna Pension Trust Scheme Ltd. and 24 other defendants.

To contact the reporter on this story: Matthew Hill in Lusaka at mhill58@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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