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THE LAND AND AGRICULTURAL DEVELOPMENT BANK OF SOUTH AFRICA - Notice of event of default

Release Date: 28/04/2020 07:10:00      Code(s): LBK15 LBK20 LBK24 LBK29 LBK28 LBK32 LBK38 LBK22 LBK23 LBK33 LBK30 LBK31 LBK18 LBK26 LBK27 LBK36 LBK37 LBK35       PDF(s):  
Notice of event of default

LAND AND AGRICULTURAL DEVELOPMENT BANK OF SOUTH AFRICA

Established in the Republic of South Africa in terms of the Land Bank Act, 18 of 1912, which continued to
exist in terms of section 3 of the Land Bank Act, 13 of 1944, and continues to exist under the name of the
Land and Agricultural Development Bank of South Africa in terms of the Land and Agricultural Development
Bank Act, 15 of 2002, despite the repeal of both the 1912 and the 1944 Acts)

("Land Bank" or the “Issuer")

(“BILB”)



                                      NOTICE OF EVENT OF DEFAULT


Notice is hereby given to all Noteholders holding Notes issued by the Land Bank under its Land and
Agricultural Development Bank of South Africa (i) ZAR 20 Billion Domestic Medium Term Note Programme
dated 18 October 2010 (the “2010 Programme”) and its (ii) ZAR30,000,000,000 Domestic Medium Term
Note Programme dated 13 March 2017 (the "2017 Programme") in accordance with Condition 17 (Notices)
of the terms and conditions governing the Notes under the 2010 Programme (the "2010 Conditions") and
Condition 18 (Notices) of the terms and conditions governing the Notes under the 2017 Programme
(the "2017 Conditions").

Capitalised terms and expressions used and not otherwise defined herein, shall bear the meanings ascribed
thereto in the section of the Programme Memorandum titled "Interpretation".

WHEREAS:

1.     Condition 12.1.4 (Events of Default) of the terms and conditions of the notes under the 2010
       Programme and Condition 16.1.1.4 (Cross Default) of the terms and conditions of the notes under
       the 2017 Programme, have been triggered and an Event of Default under the notes has occurred. A
       SENS announcement confirming this was issued on 23 April 2020.

2.     In terms of a financing arrangement with a third party lender under a revolving credit facility
       (the “Affected RCF”), the Issuer was due to make a payment on 1 April 2020.

3.     The Issuer failed to make the payment when due to the lender under the Affected RCF and such non-
       payment constitutes an event of default under the Affected RCF. The issuer has, in addition,
       defaulted on indebtedness that together with the default under the Affected RCF constitutes
       Material Indebtedness in that the defaults under the Affected RCF and other debt obligations, in
       aggregate, constitute more than “1% (one percent) of the total assets of the Issuer (or its equivalent
       in other currencies) as published in the last audited financial statements of the Issuer at the time of
       the occurrence of an Event of Default”.
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4.    Accordingly, Condition 12.1.4 (Events of Default) of the terms and conditions of the notes under the
      2010 Programme and Condition 16.1.1.4 (Cross Default) of the terms and conditions notes under the
      2017 Programme, has been triggered and an Event of Default under the notes has occurred.

5.    Accordingly, the Issuer hereby gives notice of such Event of Default having occurred to the
      Noteholders pursuant Condition 12.2 (Events of Default) read with Condition 17 (Notices) of the
      terms and conditions of the notes under the 2010 Programme and Condition 16.3 (Notification of
      Event of Default) read with Condition 18 (Notices) of the terms and conditions of the notes under the
      2017 Programme.

6.    Noteholders and potential investors are advised to exercise caution when dealing in the Land Bank’s
      notes and securities.

7.    The Land Bank is currently experiencing a liquidity shortfall and the Land Bank is accordingly engaging
      with various stakeholders with a view to addressing this challenge especially in regard to financial
      obligations falling due with a request that these obligations be deferred.

8.    The Land Bank is requesting the note holders to form a co-ordinated group and as mentioned herein
      the Land Bank has taken up an offer from the Association for Savings and Investment South Africa
      (“ASISA”) to take the lead on co-ordinating the note holder group.

9.    The Land Bank is approaching stakeholders to raise up to R5 billion to meet the Land Bank’s medium
      term liquidity requirements. The Land Bank currently has access to a R5,7 billion government
      guarantee facility of which approximately R4,3 billion remains available to support its capital raising
      initiatives.

10.   Remedial Action

      10.1.   The Land Bank is in the process of appointing a financial adviser to assist and advise the Land
              Bank (i) in developing a business plan (on the back of the repurposing plan which is at an
              advanced stage) and (ii) in negotiating with its funders and noteholders (“funders”)
              regarding the potential restructuring of its financial indebtedness.

      10.2.   The Land Bank does not have sufficient liquidity to enable the Land Bank to meet its short
              term interest and capital repayments across all its funders unless the Land Bank is able to
              secure sufficient bridge funding. Certain funders have or will be approached to participate in
              the provision of bridge funding to the Land Bank.

      10.3.   In order to assist the Land Bank in generating sufficient liquidity to enable the Land Bank to
              continue with its operations and to fulfil its mandate while developing the business plan and
              negotiating the restructuring of its financial indebtedness with its funders the Land Bank will,
              in due course be requesting all its funders (including the note holders) to agree to the
              following:

              10.3.1.      a deferral of all interest and capital payments which fall due within the next
                           6 months for a period of 12 months (“Deferral”);

              10.3.2.      to conclude a combined standstill/deferral agreement governing the Deferral;

              10.3.3.      given the time it will take to negotiate and agree the Deferral, the Land Bank will
                           request an interim deferral/standstill while the Deferral is negotiated and
                           concluded; and

              10.3.4.      waivers of current defaults and anticipated defaults arising from the Deferral
                           and/or the interim deferral and in relation to any planned
                           discussions/negotiations with funders.
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      10.4.   Formal requests will be sent to the Noteholders in due course.

      10.5.   The Land Bank will assess whether the Deferral will solve its liquidity constraints and whether
              there will still be a requirement for bridge funding pending the development and
              implementation of the business plan and restructuring of its financial indebtedness. The
              likelihood is that the Land Bank will require a certain amount of interim bridge funding
              notwithstanding the deferral.

      10.6.   In order to facilitate effective communication with such a large group of funders the Land
              Bank is requesting its funders to arrange themselves into their respective groups together
              with co-ordinating funders/committees appointed to represent each group. In this regard:

              10.6.1.     The Land Bank has requested the commercial banks to arrange themselves into
                          a co-ordinated group. The local commercial bank with the largest loan exposure
                          has been approached by the Land Bank with a request that it arrange the
                          commercial banks into a co-ordinated group.

              10.6.2.     The listed Noteholders are hereby requested to organise themselves into a
                          group with a designated co-ordinating committee appointed to represent the
                          interests of the listed Noteholders. The Land Bank has requested that ASISA co-
                          ordinate the note holders and the Land Bank will provide the necessary
                          assistance to support this process; and

              10.6.3.     The other funders will be arranged into ad hoc groups where appropriate and
                          certain of the funders will be dealt with on a bilateral basis.

11.   As the matter progresses it is likely to become necessary to merge the groups into one group with a
      co-ordinating committee overseeing the interests of the funding group and subject to appropriate
      arrangements being in place to manage the disclosure of any non-public price sensitive information.

12.   The Land Bank requests all the Noteholders to consider the request to arrange themselves into a co-
      ordinated group with the assistance of ASISA.

13.   The management team of Land Bank remains committed to a transparent process and undertakes
      to work with Land Bank’s funders to mitigate risks identified.

14.   Noteholders will be kept appraised of developments.

15.   Copies of the 2010 Programme, the 2017 Programme and the relevant Applicable Pricing
      Supplements can be accessed on the Issuer’s Website at the following link: www.landbank.co.za
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16.    Any queries relating to the potential Event of Default may be addressed by Noteholders to the Issuer
       at the contact details set out below or, in the case of holders of beneficial interests in uncertificated
       Notes held through a CSDP, to the relevant CSDP to be conveyed to the Issuer.

       16.1.   Issuer office

               Land and Agricultural Development Bank of South Africa
               Block D, Eco Glades Office Park
               420 Witch Hazel Road
               Eco Park
               Centurion, 0157
               South Africa
               Contact:
               Avanda Kanana | Chief Executive Officer
               Khensani Mukhari | Chief Financial Officer
               Rebecca Phalatse | General Manager: Marketing and Communication
               Tel: +2774 159 6833

       16.2.   Debt Sponsor

               The Standard Bank of South Africa Limited, acting through its Corporate and Investment
               Banking division
               (registration number: 1962/000738/06)
               3rd Floor, East Wing
               30 Baker Street
               Rosebank, 2196
               South Africa
               PO Box 61344
               Marshalltown, 2107
               South Africa
               Contact: Ms Z Sisulu
               Email: Zoya.Sisulu@standardbank.co.za

Date: 24 April 2020

Date: 28-04-2020 07:10:00
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