FINANCE Bank Zambia (FBZ), one of the commercial banks in Zambia, could take over the majority stake in Tetrad Investment Bank (TIB) ahead of Russian investment consortium Horizon Capital Consortium Holdings (HCCH), businessdigest has established.
This development has prompted TIB to request an extension of the reprieve that had been agreed by creditors and depositors at a scheme meeting in August to defer claims from today to January 31 next year to in order to allow time for negotiations between the bank and FBZ founded in 1986.
Before the latest discussion with FBZ, TIB had signed an agreement with the Russian investment consortium that would, upon conclusion, give the latter a majority shareholding in the Zimbabwean bank.
This comes at a time HCCH has asked TIB for another two weeks in which to meet its obligations under the agreement.
TIB’s assets had been under attack from creditors after the bank failed to honour claims.
The bank approached the High Court in July this year seeking relief from creditors.
High Court judge, Justice Nokuthula Moyo then ruled that retired Justice George 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. The meeting held on August 8 agreed on the deferment to today.
In a letter to creditors, dated October 23 2014, Smith, who is the chairperson of the scheme meeting, said the bank has entered into negotiations with FBZ which had eyed an equity stake in the bank before the agreement with HCCH.
“In addition to the request by HCCH for more time, creditors are hereby informed that prior to the agreement signed with HCCH, the bank had since May 2013 been involved in negotiations with Finance Bank of Zambia Plc (FBZ). These negotiations had lapsed following the conclusion of the agreement with HCCH,” Smith wrote.
“Subsequent to the scheme meeting FBZ revived its interest and fresh offers of negotiation were received by the bank.”
He said FBZ has since commissioned the revision and updating of a previous due diligence report, which process has been completed by Deloitte Zambia.
“Should it be considered in the interests of the bank and the creditors to enter into an agreement with FBZ, the bank in conjunction with FBZ will produce proposals to the creditors for their approval as soon as they are finalised, and within the timeframe proposed herein (to January 31, 2015),” Smith said. “Such proposals would of necessity include details as to the period of time in which creditors should expect to be paid, and any interest payable within the period.”
Smith revealed to creditors that FBZ had, in a letter dated October 3 2014, written to the Reserve Bank of Zimbabwe (RBZ) confirming its interest in discussions with Tetrad for the acquisition of an equity stake in the bank. He added FBZ has consented to its offer of negotiations to be disclosed to creditors.
Smith said he had sufficient supporting documentation to ask for an extension which includes, the FBZ letter to the RBZ dated October 3 2014, due diligence report by Deloitte (Zambia) dated October 8 2014 and an agreement for time limited negotiations dated October 15 2014 made between Tetrad Holdings Ltd and FBZ.'