Bloomberg and Reuters
African Bank Investments Limited (Abil), which collapsed in August, said that instead of trying to arrange an initial public offering next year, a share sale may be years away.
“The curator anticipates that the new entity will require several years of trading in order to build up a track record which will be acceptable to potential investors before it can be listed” on the JSE, Abil treasurer Gavin Jones, said yesterday.
Tom Winterboer, the Abil curator, has had laws changed to try and save the lender’s remaining viable assets and create a “good bank”.
Winning a fresh banking licence and establishing the new bank remained objectives for this year, Jones said.
“The curator is encouraged by this development and envisages a good response to the exchange offer that will be made to creditors in due course,” Jones said.
“The new debt instruments will be issued on the transaction effective date, which is the day good bank commences.”
Abil said it had agreed that subordinated debt holders would recoup 37.5 percent of their investments instead of getting nothing.
In exchange for the subordinated funders’ R4.4 billion in claims, Abil’s good bank of viable business will issue new subordinated 10-year bonds for R1.65bn of those claims, the lender said yesterday.
Subordinated creditors can have their claims converted into equity or exchange it for a combination of notes in the good bank and subordinated residual debt instruments. Abil also received the go-ahead from creditors to split its good loans from its toxic assets, Winterboer said.
Both senior unsecured debt holders and subordinated debt holders had agreed in principle to the bank’s restructuring proposal, he added.
Senior unsecured debt holders would have 90 percent of their claims exchanged for new unsecured notes in the lender’s “good bank” and the rest as residual securities in Abil, he said.
When Abil failed, the Reserve Bank said senior funders would get 90c on every rand invested and junior debt holders would lose everything. It rescued the lender in August and appointed a curator to turn around the business after heavy losses from granting unsecured loans to low-income borrowers.
“It’s positive from an investor perspective – certainty is always key,” said Bronwyn Blood, a money manager at Cadiz Asset Management, which holds both senior and junior Abil debt.