HARARE – Turnall Holdings is likely to report a full-year loss of $7 million, double its half-year deficit , an official said on Friday after parent company FBC Holdings’ shareholders voted to divest from the firm.
Shareholders of financial services group, FBC Holdings, on Friday at an extraordinary general meeting, unanimously voted to divest from its loss making manufacturing subsidiary by way of a dividend in specie to the shareholders.
Group chairman Herbert Nkala told shareholders that the decision to distribute Turnall shares to FBC minority shareholders came after a Reserve Bank of Zimbabwe directive ordering the group to cease its investment in non-banking activities.
FBC Bank, the flagship unit of the financial services group, in 2010 acquired a 58,32% equity investment in Turnall through realisation of pledged security on a non-performing loan. After a series of restructuring of the group, the bank eventually held 10,42% shareholding of Turnall with the remainder being held by FBCH.
Nkala said the balance of Turnall’s shares would not be made available for distribution, but would finance the $754 000 cost the transaction.
“Projections to year end indicate that Turnall will most likely double its half year loss as new management restructures the business. We anticipate, however that the business will be back in the black in the following year that is 2015,” Nkala said.
Turnall posted a loss of $3,5 million for the six months to June.
He said the divestment of FBCH from Turnall would reduce also create additional income arising from a loan yet to be serviced by the manufacturing concern.
“Turnall currently has an outstanding loan balance of $2 050 719 expiring in July 2016. The loan is considered an insider loan because the loan is due for a related entity. Accordingly, the loan is deducted from the regulatory capital of FBC Bank,” Nkala said.
“However, upon the successful execution of the dividend in specie, the loan will no longer be classified as an insider loan and this will have a positive effect on the bank’s capital adequacy and capacity to underwrite more business.”
– The Source