Almost all the R1.5 billion investment by JSE-listed Afristrat Investment Holdings Limited in Frankfurt-listed MyBucks SA, a microlender in a number of southern African international locations that collapsed and is now in liquidation, has been misplaced.
Afristrat owns a 42.39% stake in MyBucks after initially offering start-up capital loans to MyBucks however being compelled to transform its loans into fairness.
Afristrat was beforehand often called Ecsponent Limited.
Preference shareholders in Ecsponent had little choice however to decide, in May 2020, to a restructuring of the group that resulted in R2.3 billion in desire shareholder debt being transformed into fairness in Ecsponent.
MyBucks was based by former Blue Financial Services boss Dave van Niekerk. However, Van Niekerk has not been concerned with MyBucks for a number of years.
Investigations
Afristrat CEO George Manyere advised Moneyweb, final week, that Afristrat has launched about 5 forensic investigations in complete into the operations of MyBucks.
Manyere stated three of these investigations – two in South Africa and one other in Botswana – have been accomplished.
Afristrat is in the ultimate levels of getting the ultimate forensic investigation report in Zambia and has commenced with a forensic investigation in Eswatini as nicely, he stated.
“The operations of MyBucks have been fairly expansive, with [operations in] 11 or 12 African international locations and three outdoors of Africa, particularly Australia, Poland and Spain.
“So it [the forensic investigations] was quite an expansive process and almost 90% of Ecsponent or Afristrat’s investment funds were invested in MyBucks either as equity or as loans and all that money was lost with the collapse of MyBucks, which is now in bankruptcy,” he stated.
Loss and litigation
Afristrat disclosed in May 2022 that it misplaced in extra of R1.5 billion of fairness worth in MyBucks and its subsidiaries by way of debt, which was supplied underneath the pretext of rising the MyBucks mortgage e-book.
However, Afristrat stated this debt was considerably diverted to satisfy MyBucks administration overheads and curiosity bills from different borrowings being transformed into fairness in MyBucks.
This led to Afristrat’s board:
- Instructing its attorneys in South Africa and Botswana to institute civil claims totalling R250 million in opposition to the accountable former executives on the firm and/or MyBucks; and
- Instituting an R800 million declare in opposition to MyBucks.
Afristrat added that its board is contemplating its choices to probably additionally institute civil claims in opposition to the earlier administration, administrators and auditors of MyBucks “where considered appropriate”.
Manyere confirmed final week that the declare in opposition to MyBucks had been launched in Luxembourg with the receiver who’s dealing with the chapter course of for MyBucks, whereas the litigation course of in Botswana has already began and is “quite advanced”.
He stated the litigation in South Africa has additionally began and a fee of inquiry, granted by a excessive court docket and chaired by a retired decide, can also be presently underway.
“But I think what is critically important for us in this situation is to put in an appropriate liquid facility to fund all these processes. So we are also seized with that situation,” he stated.
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Default
The liabilities of Afristrat resulted in the corporate saying on 12 May that it is going to be unable to pay any curiosity or capital due and payable to holders of notes with speedy impact which, in phrases of Condition 16 of the programme memorandum, will represent an occasion of default.
Afristrat stated it can additionally make a suggestion to present holders of desire shares to transform to abnormal shares in the corporate.
Manyere stated final week Afristrat is contemplating all the assorted choices to enhance the corporate’s liquidity however believes it’s vital to first clear up its steadiness sheet.
“That is why we did announce that they are going to be approaching our remaining collectors and lender with a proposal to transform their debt into fairness.
“We believe that is critical in us successfully being able to improve that liquidity position because before that balance sheet clean-up, it will be a lot more challenging to bring in any other liquidity solution. So that process is also currently being worked on,” he stated.
Manyere declined to touch upon the preliminary response of Afristrat collectors to the corporate’s liquidity enchancment proposal, stating: “We are still engaging.”
Manyere was additionally guarded in his remark concerning the prospects of Afristrat recovering something from its R250 million civil declare in opposition to the accountable former executives at Afristrat and/or MyBucks in South Africa and Botswana or the R800 million declare in opposition to MyBucks.
“These are all processes which can be being dealt with legally however I can’t touch upon the prospects. It’s goes to be robust as a result of clearly it’s very clear that MyBucks has completely collapsed.
“There will be maybe some recoveries here and there, but I can’t speak at this point what exactly would be the probability of recovery,” he stated.
JSE discover
Afristrat final week discovered itself on the flawed aspect of the JSE, with the bourse issuing a discover concerning the late submission of its provisional annual monetary statements.
It warned that if Afristat fails to publish these outcomes by 31 July, its itemizing on the JSE could also be suspended.
Manyere confirmed final week that Afristrat will likely be unable to satisfy the JSE deadline.
“We will definitely publish I think sometime soon but definitely not by July 31,” he stated.
Manyere stated the explanation for the delay is as a result of the corporate has been “working on a plan to save the business of Afristrat because of the impact of the significant losses we suffered with MyBucks”.
“In the final couple of months, we’ve been centered on enterprise varied forensic investigations in South Africa, Botswana, Eswatini and Zambia primarily.
“They at the moment are nearing completion so it did influence the timeframe for the auditors to begin.
“That audit has began however, additionally on the similar time, we’re engaged on a plan to enhance our liquidity place in order for us to finish all these varied workstreams.
“So yes, we will be delayed in releasing the financials but the audit process has started and we should have that completed in the third quarter [of 2022],” he stated.
Resignations
Afristrat introduced final week that Tertius de Kock, the corporate’s chief monetary officer and an govt director, has tendered his resignation efficient from 26 July as a director though he’ll serve a one-month discover interval.
Manyere stated De Kock’s resignation was not associated to the late publication of Afristat’s monetary outcomes.
De Kock’s resignation follows that of Yvonne Maitin, who resigned as an unbiased non- govt director efficient from 7 June on account of “her other work commitments”.
An analyst who didn’t need to be named stated traders and lenders usually get co-opted into changing their investment or loans into fairness on the premise of a plan by an organization however it means they offer up their rights in the hope there’s a turnaround, which hardly ever pans out.
This article first appeared on Moneyweb and was republished with permission. Read the unique article here.
