- The Land Bank has outlined timelines for its restructuring process.
- It expects to raise R3 billion for this restructuring process.
- It previously defaulted on some of its debt, triggering a cross default on some of its other bonds.
- It is the biggest lender to SA farmers.
The Land and Agricultural Development Bank has said it expects to raise R3 billion needed for its restructuring process within the next two weeks.
The bank, which is the biggest lender to South African farmers, defaulted on some of its debt towards the end of April, triggering a cross default on some of its other bonds, Fin24 previously reported.
It has since appointed Rand Merchant Bank as its financial adviser and is in discussions to secure a R3 billion loan to help cover its operating expenses and pay out some loans it approved to farmers.
In a notice on the Stock Exchange News Service, issued on Wednesday, it outlined timelines for its restructuring process, as well as a second stage – "repurposing strategy".
"Negotiations around the liquidity facility are ongoing, with the process anticipated to be finalised within the next fortnight, depending on negotiations with providers of this facility," the notice read.
The bank's solvency position in the meantime can not yet be determined without the finalisation of its annual financial statements for the year ended 31 March, 2020. "The impact of the liquidity challenges faced by the Land Bank and the Covid-19 pandemic may result in significant additional impairments in the value of certain investments," it said.
A process on its liability solution is underway, which is due to be concluded on 31 August, although timelines are subject to change, it said. The liability solution is aimed at addressing the cross defaults, extend the term of all funding that has matured or will mature in the next 12 months to develop a "more sustainable" maturity profile, it said.
The process for an equity solution is also underway – to determine the additional equity required to recapitalise the bank. This process will take into account the work of the repurposing strategy, which is due to be finalised at the end of September.
Any commitment by its shareholder, National Treasury, is subject to approval by Parliament, it said. While Treasury previously said it would assist the bank with recapitalisation and further guarantees, it later changed its tune as there was no space in the 2020/21 budget to allocate funding to the bank fro recapitalisation, Fin24 previously reported.
The Land Bank has also appointed an external reviewer – SNG Grant Thornton – for its loan book. This provisioning review is due to be finalised in early July, but does not replace the full annual audit by the Auditor General, it said.