Tetrad in mire

Senior Business Reporter
TETRAD Investment Bank has been placed under provisional judicial management of Winsley Militala of Petwin Executor and Trust Company (Pvt) Ltd. This follows an application by the company’s board of directors who cited liquidity pressure due to unfavourable macro-economic conditions, high non-performing loans and negative revenue growth.

In its application filed at the Bulawayo High Court through its lawyers, G N Mlotshwa and Company Legal Practitioners, Tetrad Investment Bank said it was just and equitable for the bank to be placed under provisional judicial management to protect its recapitalisation process.

“Owing to the depressed liquidity conditions as well as high default on its debtors’ book, the applicant is unable to meet demand or upon maturity, deposits place with it or indeed meet sums due to trade creditors. Consequently, the applicant entered into a Scheme of Arrangement under Case No. HC 1532/14 with its creditors in order to allow for recapitalisation of the bank by the Horizon Capital Consortium Zimbabwe (Pvt) Ltd (Horizon) in terms of the agreement signed between Tetrad Holdings Ltd and Horizon,” said the lawyers.

In his founding affidavit, Eugene Mlambo, Tetrad Investment Bank’s acting chief executive officer, said the application for provisional judicial management was a voluntary application in terms of section 299 (1) as read with section 207 (1) of the Companies Act.

“Applicant has been failing to make payments to depositors’ funds as and when their investments mature, or indeed when demand is made for the same as in the case of current account holders. Consequently on August 8, 2014, a scheme of arrangement was proposed by applicant in terms of which inter alia a moratorium was sought in respect of the repayment of the deposits, other due legal action, applications writ, summons and other processes,” said Mlambo.

“It is apparent that these creditors will proceed to execute against the applicant’s properties any other day after January 31 when the scheme would have expired,” he said.

The bank has an authorised share capital of $1 million divided into one billion shares of nominal value at $0,01 each.

Justice Martin Makonese granted the provisional judicial management order.

“The applicant is placed under judicial management for an indefinite period from the date of that appointment and upon completion of a bond of security, the judicial manager shall forthwith take over the management of the bank’s affairs and shall prepare and submit reports in accordance with section 303 of the Companies Act.

“The Master of High Court is hereby directed to appoint Winsley Militala of Petwin Executor and Trust Company (Pvt) Ltd as provisional judiciary manager,” ruled Justice Makonese.

Last year, the Reserve Bank of Zimbabwe (RBZ) suspended Tetrad Investment Bank from taking deposits and issuing loans until the troubled institution had completed its recapitalisation exercise.

In August, Tetrad creditors voted for the scheme meeting that agreed to defer claims to allow processes to recapitalise the institution.

The creditors further agreed to allow Russian investor Horizon Capital to finalise acquisition of a controlling stake in the bank. Horizon is made up of a Russian investor Sergey Pokusaev, the Zimbabwe government and other local investors.

Before the scheme meeting, creditors had obtained writs of execution to attach the bank’s assets.

Last year in May, Tetrad Holdings shareholders approved the takeover of the group’s investment banking arm by Horizon, which wanted to inject $200 million fresh capital into the struggling bank, which is among the seven financial institutions being monitored by the central bank under the Troubled and Insolvent Bank Policy.

During a scheme of arrangement meeting at a local hotel attended by hundreds of angry creditors and depositors as well as a consultant representing the potential investor, management pleaded for the deferment of payment until October 31 to pave way for the takeover processes to be completed, or risk losing out.

The bank, which has over 3,000 depositors, had been issued with 65 summons, with 17 of those seen as presenting a threat to its assets.

Established in 1995, the Tetrad Group is a Zimbabwean based organisation with interests in the financial services sector, insurance, property, mining and other areas of commerce comprises a Merchant Bank, Tetrad Investment Bank, an asset management company, TFS Management Company, a micro finance company, Multiridge Finance, an insurance company, THI Insurance and a property development and management company.