Troubled Tetrad Investment Bank has tabled a debt into equity conversion offer and payment in cash to proven depositors and creditors as the judicial manager sees possibilities of a revival.
Depositors and creditors were owed a total of about $67.4 million as at January 2015 when the bank was placed under the provisional judicial management.
“Should the scheme be implemented, creditors and depositors become shareholders of the Bank,” said the judicial manager, the Depositors Protection Corporation (DPC) in a circular.
The proposed scheme follows several failed attempts to recapitalise the bank.
A proposal to liquidate the bank was rejected because creditors and depositors would not recover any money.
If the new proposal is implemented, the bank’s capital position moves from a deficit of $35 million to a positive $25.6 million, making it attractive to potential investors.
The DPC has undertaken to fund part of the cash outlay to depositors amounting to $1.1 million to cover the first $1 000 payable to depositors.
Tetrad will pay the amount advanced by DPC over a three-year period. The funding is also secured by Treasury Bills.
The balance of $2.9 million will be funded using internal cash resources and should there be insufficient cash at the time of payment, the bank will consider liquidating Treasury Bills to fund the shortfall.
The DPC was appointed the provisional judicial manager of Tetrad on July 1, 2015 and had, by the end of 2016, recovered about $16.2 million from the various debtors, according to a January 2017 update by the central bank.
The recoveries comprise cash amounting to $5.48 million; properties and Treasury Bills worth $8.95 million and $1.8 million, respectively.
At the second Tetrad Bank creditors’ meeting held on 24 and 25 September 2015 in Harare and Bulawayo, respectively, the creditors passed a resolution authorising the provisional judicial manager to implement a scheme of arrangement in terms of the Companies Act.
The central bank expects an anchor shareholder to emerge and inject working capital into the bank.-The Source