This does not affect the curatorship of African Bank, according to curator Tom Winterboer. “The bank continues to operate as before under the control of the curator and remains open for business,” he said. “Furthermore, the contractual relationship that African Bank has with Abil’s subsidiary, The Standard and General Insurance Company (Stangen), in terms of which Stangen provides insurance products to African Bank customers, is also unaffected and remains intact.”
Letters of demand
Abil’s application for business rescue follows letters of demand served on it last week by creditors regarding the repayment of loans to Ellerine Furnishers. Ellerine was placed into business rescue earlier this year and although the business rescue practitioners, according to Abil, made “certain interim payments” to creditors, an outstanding amount remains.
Abil issued guarantees for a total of R550 million to Absa, FirstRand, Investec and Standard Bank for banking facilities granted by these creditors to Ellerine’s.
“Abil’s intention was to settle the creditors from the proceeds of the sale by it of the entire issued equity held by it in Stangen,” Abil said. “To date no agreement has been concluded and no offer has been received from the consortium to purchase the company’s equity in Stangen.”
The consortium refers to six banks and the Public Investment Corporation.
As Abil is not trading and its source of cash is from dividends received from Stangen, it did not have cash to repay loans and amounts due under guarantees. “After considering various options, the board of directors resolved to and approved a resolution to voluntarily begin a business rescue process,” Abil said.
Abil has a loan from African Bank of about R447 million. As to the impact of the business rescue on the loan repayment, Winterboer said Abil should be able to repay the loan to African Bank.
He reiterated the restructuring of African Bank into the Good Bank group structure was on course.