Masiyiwa in a tricky business fix

Strive Masiyiwa is reportedly having trouble selling off 20-34% of his stake in Liquid Telecom because of the Coronavirus pandemic. The stake he is looking to sell is valued at around US$600 million.Part of the proceeds from the sale of shares will be used to pay Kwese TV’s US$375 million administration bill. Masiyiwa was given a deadline by Public Investment Corp (PIC) which was backing the loan used in Econet Media’s Kwese TV project.

In return for the loan, Masiyiwa is said to have pledged shares in Liquid Telecom to PIC as security for the loan. Earlier this year Masiwa intended to finance repayment of this debt from proceeds of an initial public offering in Liquid Telecom but that did not materialise because of COVID-19 which gave investors cold feet.Sources who spoke to Bloomberg said Masiyiwa prefers to sell part of his 66% stake in Liquid Telecom to avoid letting go the shares at a discount. Given that the the sale of the shares has been complicated by COVID-19 it’s hard to see how that changes by the end of August.When you also consider that Masiyiwa is selling whilst under pressure to settle another debt if a deal is struck in the near future one would have reason to believe the Econet Wireless CEO would not have as much leverage.

Kwese TV had a torrid time after launch – failing to acquire subscribers fast enough to pay for the content they had acquired. This led to failure by Econet Media to settle licence fees for content they had already aired (e.g The 2018 World Cup and NBA).