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Business Correspondent
Tetrad Investment Bank creditors have agreed deferment on payments of their money owed until October 31 to pave way for the finalisation of the $200 million investment into the bank by Horizon Capital Consortium of Russia.The creditors voted for the resolution at a scheme meeting this Friday after being reminded the bank would be placed under curatorship should they deny the investment to go ahead.
Tetrad’s head of legal and advisory affair, Mr Marcus Campbell-Reynolds said the objective of passing the scheme is to provide way to move forward with the investment transaction.
“The vote will lead to the immediate stabilization of the bank and will protect the bank’s assets, pending finalisation of the investment transaction,” he said.
He said the $200 million capital injection will stabilise the current situation, but has also been stalled by delays in regulatory approvals.
Tetrad Bank in March this year entered into an investment transaction agreement with Horizon Capital Consortium.
The delays in the implementation of its recapitalisation process were due to outstanding certain regulatory approvals relating to the way the transaction is structured.
This has forced the bank to make contingency measures to prevent its restless creditors from making further claims to recover what is owed to them before completion of the recapitalisation process.
Mr Reynolds said the vote means that any action, application or executions against the bank will be put on hold.
There were several threats to the bank’s assets by creditors who want to recover their monies. The bank has 3 000 depositors, had been issued 65 summons with some having won cases to attach assets. The bank has $14 million in advances, $10 million of which were insider and related party loans.
Tetrad has an asset value of $85 million in loans and properties and liabilities totalling $83 million.
Tetrad group chief executive Mr Eugene Mlambo said most of its (Tetrad) creditors were struggling to pay and the group had only recover $5,4 million in properties.
Mr Mlambo said the bank’s problems started when the central bank increased capital requirements to $25 million and the company failed to convert its assets to liquid.
Last year, the Reserve Bank raised minimum capital requirements for commercial and merchant banks to $100 million from $12,5 million and $10 million.
Banks were required to have met $25 million capitalisation by December last year and submit plans on how they intend to comply with the $100 million minimum capital threshold by end of 2020.
He said had the transaction been concluded earlier, current problems would not happened.
Mr Mlambo said the investor, who is poised to assume a controlling stake in the group, will bring money for mining and infrastructure.
“The investor has the money to capitalise the bank. We have retrenched some of our
workers and we have not paid salaries just to keep the institution going. We are stuck as we wait for regulatory approval for the deal,” he said.
Mr Mlambo said creditors were owed $75 million and that the deal was a 49 /51 percent shareholding in favour of locals.
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