adminJOHANNESBURG. – Sanlam Limited, South Africa’s second largest life insurer, is the second biggest investor in a floating-rate note which may default following the liquidation of an engineering company. The Cape Town-based company invested US$24 million in Bacarac Trading 142 (Pty) Ltd, specifically created for the purpose of investing in First Strut RF Ltd’s R925 million of floating-rate notes, according to Sanlam and court documents.
The “major part” of the investment is being held in Sanlam’s own corporate-debt portfolio, Kobus Moller, the company’s financial director said in an e-mailed response to questions.
“This exposure is adequately provided for and policyholders are not affected.”
Investec Plc’s banking unit loaned First Strut, trading under the name First Tech Group R240 million and its investment arm invested R435 million in the First Strut bonds. First Rand Ltd, South Africa’s second-largest bank loaned R200 million to First Strut while its Rand Merchant Bank unit invested R50 million in the notes.
Prudential Portfolio Managers bought R51 million of the debt and Fairtree Capital (Pty) Ltd took R131 million. First Strut was placed in provisional liquidation on July 16 following failed business rescue proceedings that started six days earlier.
The company’s winding down came after the murder of chairman Jeff Wiggill last month in Soweto, southwest of Johannesburg.
Wiggill’s shooting was a contract killing, the Johannesburg-based newspaper Star reported last week, citing the bail application of one of the men arrested for his killing.
Court documents filed in Pretoria on July 16 by Leslie Matuson and John Louw who were appointed as business rescue practitioners said Sanlam had purchased R263 million of the First Strut securities. – Bloomberg.
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