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Update on the restructuring of African Bank and its engagement with stakeholders
AFRICAN BANK INVESTMENTS LIMITED
(Incorporated in the republic of South Africa)
(Registered bank controlling company)
(Registration number 1946/021193/06)
Ordinary share code : ABL ISIN: ZAE000030060
Preference share code : ABLP ISIN: ZAE000065215
("ABIL" or the "Company")
AFRICAN BANK LIMITED
(Incorporated in the Republic of South Africa)
(Registered bank)
(Registration number 1975/002526/06)
Company code : BIABL
In Curatorship
("African Bank" and the "Bank")
Update on the restructuring of African Bank and its engagement with stakeholders
1. Interested parties are referred to the statement regarding the Curatorship of African Bank that was made
by the Governor of the South African Reserve Bank ("SARB"), Ms Gill Marcus, on 10 August 2014 ("Date of Curatorship"), the content of which was announced by ABIL and the Bank on
SENS on 11 August 2014.
2. The Curatorship of the Bank is intended to provide a stable platform to enable the restructuring of the Bank
and to provide stability to the banking sector as a whole. The Curator confirms that the Bank continues to
operate and to issue and collect loans, albeit with a lower appetite for credit risk. The Curator has
maintained operational focus on offering sustainable levels of credit to appropriate customers and
optimising collections on the lending book.
3. In accordance with the powers of the Curator, all payments of interest and capital on all debt remain
suspended, with the exception of retail deposits and trade creditors.
4. A consortium of six South African banks, together with the Government Employees Pension Fund
(represented by the Public Investment Corporation), have undertaken, on terms, to underwrite a capital
raising exercise in the amount of ZAR10 billion, to be used for capitalisation of a new "Good Bank" to be
formed. The Good Bank will be a new registered bank and a wholly owned subsidiary of a newly
established holding company which is intended to be listed on the Johannesburg Stock Exchange ("JSE")
in due course. The core lending assets of the Bank, referred to in the SARB announcement of 10 August
2014 as having a book value of ZAR26 billion which is net of portfolio impairments, will be transferred to
Good Bank. It is intended that The Standard General Insurance Company Limited ("Stangen"), currently a
100% subsidiary of ABIL, will also be sold at fair value to become a subsidiary of the newly established
listed holding company.
5. It is the Curator's intention to conclude the above mentioned restructuring exercise during the first quarter
of 2015 (the "restructuring transaction effective date"). This is subject to a number of regulatory and
stakeholder approvals and processes, the outcome of which may well affect the ultimate timing.
Senior unsecured debt holders
6. All senior unsecured debt holders of African Bank (wholesale depositors, corporate depositors, bond
holders, holders of physical or dematerialised senior debt instruments and any other classes of senior
unsecured debt), will be offered amended terms and will be transferred to the Good Bank, subject to a
10% haircut of the Face Value (Face Value means principal capital plus accrued interest as at Date of
Curatorship) of such debt as at the Date of Curatorship.
7. Other key principles relating to senior unsecured debt holders include the following:
a. Interest unpaid but otherwise due for payment during Curatorship will continue to accrue interest in
line with the contractual rates as applicable to each senior unsecured debt instrument for those
senior unsecured debt holders agreeing to amended terms.
b. It is anticipated that all senior unsecured debt holder capital maturities will be extended by up to 24
additional months.
c. Any due but unpaid interest accruing during the period of Curatorship together with interest
accruing on unpaid interest due under (a) above, is intended to be settled by Good Bank, for those
senior unsecured debt holders agreeing to amended terms within 5 business days of the
restructuring transaction effective date.
8. It is intended that a committee comprising representatives of the senior unsecured debt holders will be
formed to engage with the Curator and develop the detailed amended terms for contemplation of all such
parties. In order to facilitate this engagement process, senior unsecured debt holders are therefore
requested to contact the Curator's office at curatorfunders@africanbank.co.za to provide details of their
specific holdings in respect of each senior unsecured debt instrument, together with their contact details.
Retail depositors and trade creditors
9. As per the SENS announcement dated 11 August 2014:
a. Retail depositors will receive payment of interest and capital on contractual due dates during the
period of curatorship. It is expected that retail deposits existing at the restructuring transaction
effective date will be transferred to Good Bank without effecting a haircut, (ie at 100% value) and
otherwise on the existing contractual terms in place with the Bank. For the avoidance of doubt,
retail depositors are considered to be natural persons who have deposited money directly with the
Bank. At the Date of Curatorship, retail deposits accounted for less than 1% of the total liabilities of
the Bank.
b. Trade creditors arising in the ordinary course of business prior to and during the curatorship period
are expected to be settled as usual. Trade creditors as at the restructuring effective date are
expected to be transferred to Good Bank without effecting a haircut, (ie at 100% value) and on the
existing contractual terms in place with the Bank.
Sub-ordinated debt holders
10. It is intended that a committee comprising representatives of sub-ordinated debt holders will be formed to
engage with the Curator. In order to facilitate this engagement process, sub-ordinated debt holders are
requested to contact the Curator's office at curatorfunders@africanbank.co.za to provide details of their
specific holdings in respect of each sub-ordinated debt instrument, together with their contact details.
ABIL Preference and Ordinary Shareholders
11. Once the above mentioned engagement process with senior and sub-ordinated debt holders has made
significant progress towards a satisfactory resolution of the restructuring transaction, the Board of ABIL will
engage with all classes of existing ABIL preference and ordinary shareholders.
On behalf of the Board of ABIL and the Curator of the Bank
26 September 2014
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Footnote : T Winterboer was appointed as curator of African Bank Limited on 10 August 2014 by the Minister of
Finance of the Republic of South Africa and pursuant to the Banks Act No. 94 of 1990 (as amended) to manage
the affairs of African Bank Limited subject to the supervision of the Registrar. Please note that Mr Winterboer
acts in the aforesaid capacity.
Date: 26/09/2014 03:07:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.