Rescue snag
Efforts by one subsidiary, African Bank, to purchase another, Standard General Insurance company (Stangen), from parent African Bank Investments Ltd (Abil) appear to have hit a snag. Ellerines is the third business in the Abil stable.
Negotiations continue, weeks after Abil’s business rescue practitioners were due to provide their final answer on African Bank’s buyout offer.
Last month, a consortium of six banks and the Public Investment Corp, which had guaranteed R10bn to a potential resuscitated African Bank, offered to buy Stangen for an undisclosed amount.
Abil’s business rescue practitioners were given 12 days to July 6 to consider the offer. This was extended by a week. The day passed without a word from practitioners Dawie van der Merwe and John Evans. The next day they said negotiations were continuing.
Tom Winterboer, treasury and Reserve Bank-appointed curator of African Bank, quickly reciprocated by postponing an announcement on the bank’s restructuring.
None of the parties would say what was causing the delay.
Stangen is attractive, with R786m in profits for the six months to March, and R150m in dividends.
Much rides on Stangen’s sale. Abil needs the money to pay creditors who had made immediate demands for R550m in loans granted to Ellerines, the main reason Abil was forced into business rescue.
African Bank’s financial statements for the year to September 2014 were prepared on the basis that the restructuring efforts, which include Stangen being sold, would be successful. Without these measures, auditors could not deem the bank a going concern. Apart from the guarantee, taxpayers have provided R7bn as a “backstop” to save African Bank. It is unclear what stakeholders are planning to use the total of R17bn for.
“It will be premature to discuss alternative options,” says a spokesman for Winterboer.