TETRAD Investment Bank (TIB) is set to proceed with the recapitalisation exercise after creditors and depositors agreed to defer claims, the parent company has said.
CHIEF BUSINESS REPORTER
Two weeks ago, 84,94% of creditors voted for the scheme meeting that agreed to defer claims pending the recapitalisation of the troubled bank.
The reprieve is valid until October 31 2014 “subject to any later date that the chairman of the meeting may agree with the consent of the majority of the creditors”, Tetrad Group chief executive officer Eugene Mlambo said.
Tetrad Group wholly owns TIB.
A Russian investor, Horizon Capital Consortium, is eyeing a controlling shareholding in the bank.
Mlambo told our sister paper NewsDay the significance of the scheme meeting was that it provides interim relief to the bank from demands by creditors and depositors.
“The legal protection that has now been granted by the creditors will enable the bank to go forward and complete the investment transaction. This will ultimately return the bank to normal allowing all of its commitments to all creditors and depositors to be met within a reasonable period of time,” Mlambo said.
“The bank can now focus on the investment transaction and the investor can attend to implementing the recapitalisation of the bank once it has completed its processes with regard to regulatory and other approvals that are required.”
He said the terms of the scheme provided for a moratorium in respect of payment of any obligation by Tetrad and the stay of all actions and applications and execution of all writs, summons and other process against the bank.
Mlambo said the voting threshold for the scheme to become legally binding was 75%.
“The scheme therefore becomes legally binding on the bank and all creditors and depositors irrespective of whether or not they attended the meeting or voted, meaning that no creditor is able to attach Tetrad property,” he said.
Mlambo said the original timetable was for the completion of the investment transaction by the end of May.
This was extended to June in accordance with the investment agreement terms, which permits the date to be varied with the agreement of the parties.
“The investors’ representative at the scheme meeting reaffirmed the investors’ commitment to completing the deal within the duration of the scheme,” Mlambo said.
Asked whether the coming in of a new investor would change the thrust of the bank to commercial from merchant, Mlambo said it was “up to the new investor to choose an appropriate strategy that will meet their business requirements or objectives”.
TIB’s assets had been under attack from creditors after the bank failed to honour claims.
Last month, the bank approached the High Court seeking relief from creditors.
High Court judge Justice Nokuthula Moyo then ruled that Retired Justice Smith, or any other person nominated by creditors, should chair a meeting of creditors to get a deferment on claims until the recapitalisation of the bank had been completed.