Blue seeks damages from two banks
Beleaguered microlender Blue Financial Services is pursuing R163m in damages from Standard Chartered and BancABC, which it blames for its failed recapitalisation in 2010.
“Blue shareholders placed reliance on [the banks] to perform certain obligations in terms of the recapitalisation of Blue and then for no plausible reason, [the banks] repudiated [the agreement],” said Blue CEO Johan Meiring.
Mapula Solutions, which owns the Mayibuye Group, Blue’s controlling shareholder, has obtained a court order for the R163m.
Standard Chartered declined to comment on Thursday, spokeswoman Geraldine Matchaba saying only that it was a legal matter and that it was inappropriate to comment.
Bank-holding company Atlas Mara did not respond to requests for comment.
The two banks were party to an agreement to fund the group, which incurred a record loss of R1bn in 2010, rendering it insolvent. In terms of the deal, Mayibuye would initially buy shares worth R163m in the company, while creditors including Standard Chartered and BancABC, would convert up to R1.2bn of debt into equity.
But in August 2013, some of the parties to the agreement decided to swap their debt for equity earlier, moving the date of conversion from January 2014 to September 2013.
BancABC and Standard Chartered went to court to contest this plan.
Blue received only R635.2m of the planned funds and has since voluntarily suspended its shares on AltX. It has commissioned two forensic reports into the company before and after Mayibuye bought in.
The microlender also battled to publish its financial results, losing its licence as a result.
Meiring said the forensic reports had been finalised. One report that examined allegations of fraud against Leonox, the special purpose vehicle that Mayibuye used to recapitalise Blue, cleared Blue.
But Old Mutual Investment Group’s Housing Impact Fund (Hifsa), which put more than R400m in loans and short-term financing into Leonox, sought an order to liquidate Leonox for its inability to return the funds.
Sanek director Stephen Gore, one of Leonox’s joint liquidators nominated by Hifsa, said a confidential inquiry examining Leonox’s affairs had still not been concluded.