LAND BANK IN TALKS ABOUT RESTRUCTURING ITS DEBT

THE LAND BANK is engaging with lenders about the possibility of debt restructure, the chairperson of the troubled entity told MPs yesterday. Mabotha Moloto said the Land Bank was constrained by liquidity woes, but had the clear intention of honouring the interest due on its debt. “We are at this stage engaging them with a view of restructuring the debt facilities,” Moloto told Parliament’s portfolio committee on appropriations. He said the talks took in a consortium of lenders, and were at a delicate stage. The bank defaulted on R50 billion in loans in April, and counts as one the public entities worst affected by the economic impact of the Coronavirus pandemic. The bank in February asked the National Treasury for recapitalisation of an initial R5bn and a further R17bn at a later stage. However, a Treasury official said the onset of the Covid-19 pandemic made it impossible for the fiscus to respond to the request. “Events were unravelling so fast there was no magic wand,” said Tshepiso Moahloli, the acting deputy director-general of the Treasury’s asset and liability management division. The National Treasury in February extended R5.7bn in a loan to the bank, but the bank lacked the liquidity to service its debt, and defaulted two months later. It has about R738 million in debt. The bank has liabilities of R45bn, of which about 45 percent qualifies as short term. It was engaging with a consortium of commercial banks and institutional lenders. The bank aims to use capital raised in the process to pay approved loans out to farmers, cover its operational expenses, and pay interest on its debt. However, it will not be able to pay back capital.