BancABC parent faces liquidation over P110m debt

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By Mmegi Online

Norsad Finance, a regional financier, has filed suit at the Lobatse High Court seeking the provisional liquidation of ABC Holdings, the parent company of BancABC Botswana, over a US$10 million debt.

Officials at the local bank, however, have been quick to disassociate BancABC Botswana from the legal tussle, explaining that the local operations continue as normal with a strong capital position being maintained and robust capital adequacy ratio.

ABCH company secretary, Dorothy Matiza told Mmegi the situation had arisen out of COVID-19’s impact on global financing markets and liquidity. She said this in turn had resulted in delays to ABCH’s strategic fundraising initiatives, necessitating a restructuring of the group’s balance sheet through agreements with creditors.

“Further compounding these challenges are the major currency depreciations across the African markets in which ABCH operates despite very resilient performances from the subsidiary banks, including BancABC Botswana,” she said in a written response on Wednesday.

“The cumulative effect of these challenges, and the pandemic’s effects on growth and liquidity of the holding companies, has led to a need for a restructuring of ABCH’s balance sheet. “In this regard, ABCH has been constructively engaging with its core creditors.”

In December 2020, ABCH sealed a “standstill” arrangement with all of its creditors, except Norsad, under which debt restructuring terms were agreed. The creditors who signed onto the standstill arrangement with ABCH recently agreed to an extension to April 30, allowing the group to finalise discussions on restructuring.

“Norsad has not been a party to the standstill agreement or bilateral arrangement with the majority creditors, and therefore has not had access to certain confidential information available to participating majority creditors that ABCH believes that the action taken by Norsad is detrimental to Norsad’s position,” Matiza said. She added: “ABCH has strongly encouraged Norsad to engage constructively to avoid unnecessary value destruction to their own position and those of other creditors.

“ABCH will continue to seek to engage in discussions with Norsad to find a mutually acceptable resolution.” Analysts say should Norsad succeed in its pursuit of ABCH’s provisional liquidation, the provisional liquidator appointed by the High Court would view the equity held in BancABC Botswana as an asset.

“The provisional liquidator would seek to control all of ABCH’s assets and protect them on behalf of the creditor, while awaiting a final winding up order from the court, should it come to that,” one analyst said.

Matiza said even as discussions with Norsad continue, ABCH’s attorneys were considering the Lobatse High Court petition filed.

“The company’s attorneys have been requested to advise on the options available,” she said.

“Further updates will be released in due course.”

BancABC Botswana country head of marketing and communication, Polelo Kilner stressed that the ongoing legal matter did not involve the local bank.

“BancABC Botswana wishes to inform stakeholders including staff, customers and shareholders that the disputed matter does not relate to the business or operations of BancABC Botswana in any way and is exclusively between Norsad and ABCH,” she said.

Besides ABCH, BancABC Botswana’s other shareholders include the Botswana Public Officers Pension Fund, BURS Employee Pension Fund, MVA Fund and individual investors via the Botswana Stock Exchange.

Atlas Mara and ABCH have strongly encouraged Norsad to engage constructively to avoid unnecessary value destruction to their own position and those of other creditors. Atlas Mara said it would continue to seek to engage in discussions with Norsad to find a mutually acceptable resolution.

In parallel, ABCH and its legal counsel are considering the options available to ABCH and intend to robustly contest the petition, if required. The participating creditors to the Standstill Agreement have been made aware of the petition and remain supportive of the company and ABCH while options are evaluated and discussions continue in order to work towards a comprehensive solution with the objective of maximising value for creditors and other stakeholders.

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