AFRASIA Bank Zimbabwe Limited, formerly Kingdom Bank, stands to forfeit a large part its $4 million loan to stricken chrome miner Monachrome, whose creditors look set to approve rescue bids by two firms who would offer the bank significantly less than it is owed.
The Monachrome loan is 6% of AfrAsia’s total loan and advances of $66,5 million, as reported at the end of December 2013.
Monachrome, established five years ago by German investors, stopped operations in 2012, citing high production costs and a government ban on chrome ore exports.
The company, which owes a total of $17,4 million, has been placed under administration.
At a recent meeting held at the High Court, creditors, including biggest creditor AfrAsia Bank, endorsed a resolution to vote for Monachrome’s new investor from the two bidders, NK Trading and Borderless Zimbabwe, once they provided bank guarantees backing their bids.
Borderless Zimbabwe has offered to pay $2,8 million in cash to settle all funds owed to creditors.
“The balance from this amount is to be paid to AfrAsia in exchange for its forfeiture of the balance owed to it. Borderless undertakes to utilise the banking services of AfrAsia for its banking needs in Zimbabwe,” the report read.
NK Trading’s competing bid proposes a 50-75% discount on all claims.
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“AfrAsia, as the only secured creditor is paid off immediately on the basis of a discounted claim of $1,5 million. Monachrome shall retain the bank as its primary bank for a minimum period of five years,” the report read.
The unanimous creditors’ backing for a resolution narrowing Monachrome’s rescue bids to the two suitor means all, including AfrAsia, are prepared to recover less than they are owed.
The creditors are expected to vote on a winning bid at their next meeting on May 14.
Monachrome, whose assets are valued at $16 million, owes trade creditors $5,1 million, Stanbic Bank, $233 000, AfrAsia $3,9 million and a shareholder loan of $7 million for a total of $17,4 million, although Afrasia is the sole secured creditor.
– The Source
