The struggling Land Bank is now asking some of its creditors for a R3 billion urgent loan to cover its operational expenses and pay out some of the loans it had approved to farmers.
The liquidity-constrained state-owned development finance institution defaulted on some of its debt that was due towards the end of April, triggering a cross default on some of its other bonds and worsening an already dire cash flow situation.
Initially the National Treasury, which is the Land Bank's shareholder, said it was considering assistance for the bank, in the form of recapitalisation and further guarantees. But it changed its tune earlier in May, saying there was no space to recapitalise the Land Bank in the current budget.
The Land Bank did not respond to Fin24's questions on whether it would be able to continue disbursing approved loans without Treasury's recapitalisation. But on Tuesday, it said the "urgent liquidity facility" for which it had approached its creditors "will be utilised towards disbursements, operational expenses and payment of interest, but not the repayment of capital amounts outstanding".
The bank said National Treasury would guarantee the R3 billion it is asking for, meaning the shareholder has changed its earlier stance on only being able to provide immediate support in the form of guarantees already issued.
"Land Bank’s shareholder, National Treasury, is supportive of the process and is actively participating in these discussions," added the Land Bank.
It also announced that its intention was to have this money in within the next two weeks. The bank has appointed the Rand Merchant Bank to advise it regarding this urgent capital raising.