Skeptical creditors give Tetrad’s Russian suitor a month to salvage bank, or they liquidate it

Skeptical creditors give Tetrad’s Russian suitor a month to salvage bank, or they liquidate it

By Chipo Musoko, HARARE, March 11 (The Source) – Creditors of Tetrad Investment Bank on Wednesday gave a potential Russian investor one month to inject fresh capital into the troubled bank or they would vote for its liquidation.

The central bank last November suspended the insolvent bank from undertaking banking activities while it implements a Scheme of Arrangement sanctioned by the High Court last September after it persistently failed to honor maturing liabilities, including depositors’ funds.

At the scheme meeting last year, creditors voted for a moratorium to protect the bank’s assets pending finalization of a reported $200 million rescue deal by Horizon Capital Consortium made up a Russian investor Sergey Pokusaev, the Zimbabwe government and other local investors.

At the time, shareholders told creditors that the deal had been stalled by regulatory approvals.

However, during the first creditors’ meeting at a local hotel on Wednesday attended by hundreds of angry and mostly elderly depositors, provisional judicial manager, Winsley Militala of Petwin Executor and Trust Company cast doubt on Tetrad’s reported recapitalization initiatives.

“I am yet to meet the foreign investor to get to know why the agreement is failing to bear fruit. I have nothing tangible,” he said.

He said a meeting with a local representative of Horizon on Tuesday did not produce anything meaningful.

Militala recommended that the bank be placed under provisional liquidation and that the Horizon deal could be consummated later if it materializes.

“Whichever route the bank is going to take (final judicial management or liquidation), it is going to be hard for depositors to be reunited with their hard earned cash,” he said.

In a four-hour heated meeting, creditors accused shareholders of making empty promises and demanded to see the investor in person and to have a concrete offer on the table.

The creditors also wanted an explanation of the variance in assets and liabilities which differed from last year’s figure.

Militala said since taking over management of the bank on January 29, he had established that its assets were worth $43,5 million while liabilities stood at $69,8 million, contrary to the $85 million and $83 million presented by management last year.

Secured creditors were owed $22 million, unsecured $41 million and the balance to statutory obligations.

Militala attributed the failure of the bank to non-performing loans which comprised of 99 percent of the loan book. About 40 percent of the NPLs comprised of unsecured loans amounting to $25,1 million. Related party loans, mostly unsecured, amounted to $19,1 million, the judicial manager’s report shows.

He said so far he had managed to recover $100,000 from debtors.

During the meeting, the bank, which has over 3,000 depositors, accepted 400 claims worth millions of dollars from creditors.

An employee representative who claimed to have inside information about the bank, said creditors would get 10 cents for every dollar and pleaded with them to give the potential investor a chance.

One of the shareholders, Harry Orphanides representing Panada Investments, assured creditors that the Russian would invest into the bank and advised the angry creditors not to vote for liquidation.

“I went to a meeting at 11pm yesterday and was put in touch with the funder in the United States. They are keen to get involved in the bank. They have spent $100,000 on due diligence and were very happy with the bank. Yes it has been delayed. I don’t believe it’s the fault of the investor. They said they are coming but I can’t give you a date,” he said.

Creditors agreed to give the investor a grace period of one month after which they would vote for the bank’s liquidation.

Tetrad was one of the seven institutions were being monitored by the central bank under the Troubled and Insolvent Bank Policy after it failed to meet the stipulated capital requirement $25 million by 2013 and $100 million by 2020.

The group, which established in 1995, comprises a merchant bank, TIB; 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, Tetrad Properties.