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Quarterly Progress Report - 31 March 2024
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" or "the Group")
QUARTERLY PROGRESS REPORT – 31 MARCH 2024
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").
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 Company's affairs 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
regarding the distribution of the Company's audited annual financial statements for the year ended
31 March 2022 ("AFS") and the 'Resignation of External Auditor' announcement dated 15 August
2022 advising of the resignation of Nexia with effect from 12 August 2022.
As previously reported, the process of appointing an auditor and subsequently releasing Afristrat's
AFS has been suspended.
- 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 finalised 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.
On or around 23 November 2023, the Non-Bank Financial Services Regulatory Authority (NBFIRA)
in Botswana commenced instituting actions based on the Forensic Reports in the form of inquiries
against persons of interest.
As previously reported, 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, have been engaged in finding an acceptable creditor
compromise. Failure to find an acceptable creditor compromise will result in FirstCred being placed
under liquidation.
However, on 20 March 2024 the Scheme adjudicator issued a certificate in accordance with the
scheme compromise document pursuant to the aforementioned creditor compromise in respect of
the claim of ECS Private Equity Limited, a wholly owned subsidiary of the Company, and approved
BWP0.00 (Pula nil) against the amount claimed of BWP56,627,361.90. The Board has opposed the
outcome of the adjudication decision, which did not cite the reasons for the rejection.
- the 'Business Update, Event of Default, Proposed Debt Restructuring, Capital Raise and Cautionary
Announcement' dated 12 May 2022 advising, inter alia:
o that the VSS Investigation initiated by the Company which revealed that the implementation
by the Former CEO of a ZAR100 million investment by the Company into a preference share
structure of VSS Financial Services Proprietary Limited ("VSS"), a wholly owned subsidiary
of MyBucks registered in South Africa, was done in a manner inconsistent with the approved
Board position at the time, which resulted in a total loss by the Company of this amount
("VSS Preference Share Investigation"); and
o of the further investigation into the activities of VSS, being the ultimate recipient of diverted
funds being borrowed from the Company by MyBucks' subsidiaries in South Africa and
Eswatini under misrepresentation of growing the MyBucks loan book in South Africa and
Eswatini ("VSS Investigation").
As a result of the above, ESW Investment Group (formerly "Ecsponent Swaziland Limited" and
an 85% subsidiary of Afristrat through MHMK Financial Services) conducted and completed its own
forensic investigation to establish the utilisation of capital raised through the medium of prospectus
subscription. ESW Investment Group opened criminal cases against the former management of
Afristrat, and the investigation is underway. The law enforcement agencies began making arrests
on 21 March 2024, which included the arrest of the former CEO of the Financial Services Regulatory
Authority (FSRA) in the kingdom of Eswatini as evidence of the investigation revealed that irregular
payments were made in the past.
- 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.
As reported in the 'Quarterly Progress Report – 31 December 2023' announcement and the
'Renewal of Cautionary Announcement' released on SENS on 14 December 2023 and 27 February
2024, respectively (and using the terms defined therein unless otherwise stated), Afristrat advised
that the Company had been unable to make additional progress with regard to its restructuring
initiatives process due to its Suspension and the Liquidation Application. The restructuring
initiatives process, which included an offer to holders of securities, had been expected to be
resumed once the Suspension had been lifted and the judgement regarding the Liquidation
Application had been delivered. However, the going concern assessment performed by the Board
indicated that:
i. the Group is unable to continue as a going concern;
ii. the placing of the Group under business rescue is not possible; and
iii. the group would continue to wait for the judgement of the Liquidation Application before
acting on the conclusions reached in its assessment.
As set out in the announcement released on SENS on 21 February 2024, Afristrat advised that on
20 February 2024 judgement was handed down by the Court and the Liquidation Application was
dismissed with costs. The conclusions reached on the aforementioned going concern assessment
were unaffected by the judgement.
As a result, on 1 March 2024, the Board resolved that the Company is unable to pay its debts and
does not meet the solvency and liquidity test as set forth in section 4 of the Companies Act, 2008
(Act 71 of 2008), as amended ("Companies Act"), and therefore it will be just and equitable to
wind up the Company.
Accordingly, it was resolved that the Company must proceed with a liquidation application in terms
of section 344(f) and/or 344(h) of the Companies Act, 1973, as the Company is commercially
insolvent ("Voluntary Liquidation Application").
However, Afristrat will not be able to proceed with its Voluntary Liquidation Application at this time
as the creditor of the Company ("Creditor Applicant") who had launched its own liquidation
application against the Company ("Creditor Application"), as set out in the 'Update on
Liquidation Application' announcement released on SENS on 24 July 2023, intends to re-enroll the
matter. The matter takes preference over the Voluntary Liquidation Application.
The Liquidation Application and the Creditor Application have had a significant negative impact on the
Company, including increased legal threats and actions across its various asset holdings, and this has
specifically and negatively affected the above-mentioned restructuring processes that the Company had
undertaken.
The Board will continue to wait for the outcome of the Creditor Application before it can act on the
conclusions reached.
28 March 2024
Centurion
Sponsor
Merchantec Capital
Date: 28-03-2024 09:00:00
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