Lonrho always used to be rather an intriguing company, especially under the reign of controversial entrepreneur Tiny Rowland.
Today the company - albeit in a much slimmed down version from its heyday - is managing to intrigue once more. It shares have dropped 20% to 3.9p while its associate, Zimbabwe investment group LonZim has been suspended at 31p.
Chairman of both companies is David Lenigas, who also heads up Aim listed Leni Oil & Gas. In all they share three executive directors, and have cross shareholdings. And thereby hangs the tale.
Apparently LonZim bought nearly 60m shares in Lonrho over a period of three months, including 55m bought in a private placement in November at 5p a share. In total LonZim owns 7.81% of Lonrho, which cost it a total of £2.95m.
Meanwhile Lonrho owns 24.25% of LonZim and provides it with management support services.
The private placement deal was a related party transaction, but was not disclosed as such at the time. LonZim's nominated advisor Collins Stewart was not told, leaving the broker unable to advise on whether the terms were fair.
Unsurprisingly Collins Stewart has had enough and has resigned. LonZim's shares will remain suspended until a review of the transactions by the company is completed.
Perhaps the regulators might like to cast their eyes over the circumstances of this little affair too.
