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Quarterly Progress Report - 30 June 2023
AFRISTRAT INVESTMENT HOLDINGS LIMITED
Incorporated in the Republic of South Africa
Registration number: 1998/013215/06
JSE Code: ATI - ISIN: ZAE000305959
Debt Issuer Code: ATID
Hybrid Issuer Code: ATIG
(“Afristrat” or “the Company”)
QUARTERLY PROGRESS REPORT – 30 JUNE 2023
Holders of securities are referred to the SENS announcement dated 5 August 2022 relating to the
suspension by the JSE Limited (“JSE”) of Afristrat’s securities as a result of its failure to publish its
annual financial statements for the year ended 31 March 2022 within the prescribed period (“the
Suspension”).
Holders of securities are further referred to the SENS announcement dated 21 October 2022 pertaining
to the urgent liquidation application filed by an ordinary shareholder against the Company (“the
Application”), which was opposed by Company’s attorneys. As set out in the announcement released
on SENS on 13 June 2023, holders of securities were advised that judgement on the Application, which
had been set down for hearing in the North Gauteng High Court Pretoria (“Court”) on 8 and 9 June
2023 was reserved. Details of the negative implications that the Application has had on the Company
are set out below.
In line with paragraph 1.11(c) of the JSE Listings Requirements, Afristrat is required to provide holders
of securities with an update on the state of the affairs of the Company, on a quarterly basis, until the
Suspension is lifted.
Accordingly, holders of securities are referred to the following announcements released on SENS (and
using the terms defined therein unless otherwise stated), and relevant updates thereto:
- the ‘Late submission of Annual Financial Statements update’ announcement dated 5 August 2022
stating, inter alia, that the Company’s audited annual financial statements for the year ended
31 March 2022 (“AFS”) are only expected to be distributed on or before 30 November 2022;
- the ‘Resignation of External Auditor’ announcement dated 15 August 2022 advising of the
resignation of Nexia with effect from 12 August 2022, which resignation would have a further
negative impact on the release of Afristrat’s AFS and that the Board had commenced the process
of appointing new external Auditors;
The Board hereby advises that it has been going through the process of evaluating a proposal from
a prospective auditor, specifically regarding the proposed fees. However, this process has been
negatively affected by the Application, the outcome of which may affect the recoverability of the
prospective auditor’s audit fees. As a result, the process of appointing an auditor, and subsequently
releasing Afristrat’s AFS, has been suspended until such time that the Application has been heard
in Court;
- the ‘Business Update on Afristrat’s listed note and equity investment in FirstCred Limited Botswana’
dated 26 August 2022 advising, inter alia, that the Investigation initiated by FirstCred (previously
Getbucks Limited Botswana), which was finalized in August 2022, revealed gross misuse of the
BWP120 million raised from investors by the former management of Getbucks Limited Botswana
between 2017 and 2019 and that FirstCred has since initiated civil and criminal action against
former management and their associates who were found to have participated in the
aforementioned loss of investors’ funds, which included an amount of BWP50 million invested by
Afristrat. As requested by FirstCred’s existing executives, on 19 August 2022 the High Court
granted an order of Judicial Management to allow the company an opportunity to resolve its debt
position, which surfaced from the mismanagement and misappropriation of funds by former
management;
The Judicial Management is currently ongoing and all creditors in FirstCred, including the Company,
are being engaged with a view to finding an acceptable creditor compromise. Failure to find an
acceptable creditor compromise will result in FirstCred being placed under liquidation. While the
Board believes that the Judicial Management of FirstCred will further negatively impact the
Company’s liquidity, the prospects of achieving a creditor compromise through the Judicial
Management will provide an opportunity to potentially recover some of its investment value,
although this will primarily be applied first towards creditors in ECS Private Equity Limited (formerly
Ecsponent Botswana Limited), a wholly owned subsidiary of the Company and the holder of the
BWP50 million bond investment. However, the Board is concerned that the prolonged period of
Judicial Management to which FirstCred is being subjected, despite the underlying business and its
operations having clearly shown that the business is a going concern, and that furthermore it had
been a victim of a BWP120 million misuse of funds by the former management of Mybucks S.A
(Luxembourg) who had borrowed such amount in 2017 from the then Getbucks Limited Botswana
without having repaid the loan, effectively leaving a “hole” that has led to the ongoing Judicial
Management;
- the ‘Business update on legal actions, Event of Default, proposed debt restructuring, rationale for
a capital raise and Cautionary Announcement’ dated 12 May 2022 regarding, inter alia, the Event
of Default and offers to holders of Afristrat’s securities and the ‘Renewal of Cautionary
Announcement’ announcement dated 19 September 2022 advising holders of securities that
restructuring initiatives are still underway and that holders of securities should continue to exercise
caution when dealing with the Company’s securities.
Afristrat has been unable to make additional progress in this regard due to the Suspension and the
subsequent Application. The restructuring initiatives process, which will include an offer to holders
of securities, is expected to be resumed once the Suspension is uplifted and the Application has
been heard.
Holders of securities are further advised that discussions on the above-mentioned matters have been
suspended until judgement on the Application has been issued. The Application has had a significant
negative impact on the Company, and this has specifically and negatively affected the following processes
that the Company has been going through:
i. completion of the process to appoint a new auditor, and the subsequent release of Afristrat’s AFS; and
ii. completion of the process of restructuring debts owed to certain lenders, which debts are secured with
the Company’s investment portfolio, namely Getbucks Microfinance Bank Limited (Zimbabwe)
shareholding, Ecsponent Financial Services Zambia Limited t/a Mybucks Zambia loan book, FirstCred
Limited shares, bond investment and loan book. The failure to complete the restructuring will result in
a loss of assets by the Company through foreclosure by the lenders and possible liquidation of the
Company’s subsidiaries where the debts are sitting;
The Application’s negative impact has further triggered one of the creditors of the Company to launch their
own liquidation application and the matter has been set down for hearing in Court on the unopposed
motion roll on 20 July 2023.
3 July 2023
Centurion
Sponsor
Merchantec Capital
Date: 03-07-2023 05:39:00
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