Friday, September 14, 2007

(HERALD) Council in joint venture to build suburb

Council in joint venture to build suburb
Municipal Reporter

HARARE City Council has entered into a US$30 million joint venture with an Estonian company for the development of a residential suburb and hotel on a 18,3 hectare piece of land around the Warren Hills Golf Course; a shopping centre and truck inn in Hopley; commercial and residential development north of Arcadia on almost 71ha; and a link between Enterprise Road South and Joshua Nkomo Road to give a direct route from the city centre to the airport.

The city will have 30 percent shareholding in the company, the shares bought by handing over land valued at almost US$6 million, with the Estonians having the bulk shareholding of 70 percent. The city council will provide land while the Estonians will be responsible for infrastructure development.

Details of the joint venture are contained in an internal council document dated 10 September and headlined: "Approval of the shareholding agreement between City of Harare and Augur Investments OU."

The agreement was signed by town clerk Dr Tendai Mahachi and Commission chairman Eng Michael Mahachi on September 4, 2007. Information on the joint venture had remained elusive with town clerk Dr Mahachi choosing to postpone the announcement of the apparently progressive partnership between council and foreign investors.

According to the council document, Augur Investments OU would provide funding amounting to between US$20 million and US$30 million with the city providing the land.

Mr Oleksandr Sheremet of Mt Pleasant represents Augur Investments OU in Zimbabwe.

The shareholding split was reached at taking into account the respective value of the contributions to the joint venture company by each shareholder.

According to the document, all heads of departments were consulted although sentiments are that some of the heads advised against the arrangement.

The Estonian company would have three board directors with the city having two.

The two parties would have equal decision making powers, some of which relate to the entry of new investors and the diversification of business activities other than those previously agreed upon.

If one of the parties chooses to dispose of its shareholding, first refusal would be given to the other party.

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