UPDATE 2-The Land Financial institution of S. Africa exceeds the March deadline to conclude its debt restructuring plan
* Land Financial institution is the nation’s agri-lender, with 28% market share
* State financial institution has missed debt reimbursement since 2020
* Plan for a reverse mortgage that has not but been accepted by lenders (add monetary particulars, investor remark)
JOHANNESBURG, March 31 (Reuters) – The cash-strapped South African Land and Agriculture Improvement Financial institution missed the March 31 deadline to strike a debt restructuring plan with lenders, the state-owned firm stated on Wednesday.
In April 2020, the nation’s largest agricultural lender defaulted on sure repayments of its 50 billion rand ($ 3.38 billion) debt, sparking credit score downgrades and fears of cross-default on the debt of different public enterprises.
The federal government stepped in, giving the Land Financial institution a 3 billion rand bailout final yr and seven billion rand final month, because the financial institution negotiated with a consortium of its lenders a “legal responsibility resolution” that might decide a brand new reimbursement schedule.
Negotiations, which started in mid-2020, have stalled, with lenders complaining a few lack of expertise and certainty within the Land Financial institution’s proposals.
“This date won’t be met as a result of want for the financial institution and its lenders / funders to include a cloth change within the earlier model of the legal responsibility resolution,” Land Financial institution stated in a press release.
The Land Financial institution initially requested lenders to terminate their loans in a single 5-year be aware. Extra lately, he supplied to separate his mortgage portfolio right into a enterprise e-book and a growth e-book.
Olga Constantatos, chief credit score officer at Futuregrowth, who’s an investor within the financial institution, instructed Reuters that “the downgrade may be speedy” if negotiations are protracted.
The Land Financial institution’s non-performing loans (NPLs) rose 23.6% within the 9 months ending December, with working losses of R472 million.
“They gave us excessive degree numbers within the outcomes … however what’s lacking is detailed data on the e-book and the NPLs,” Constantatos stated.
“We’ve got been requested to restrict the maturity to 5 years, however we have to know what the entity will seem like sooner or later. We will not simply go on the market and say sure.
The Land Financial institution has not given a brand new date for the conclusion of the restructuring negotiations. Nevertheless, he stated he would be capable to meet the R352million cost owed to UK lender Customary Chartered Financial institution following a courtroom ruling in December. ($ 1 = 14.7918 rand) (Report by Mfuneko Toyana in Johannesburg, edited by Louise Heavens and Matthew Lewis)