Home » Industry » Tetrad Bank Placed Under Provisional Judicial Management

TETRAD Investment Bank Limited has been placed under provisional judicial management after a deal with Horizon Capital Consortium Zimbabwe, the prospective investor that had agreed to recapitalise the institution, failed to materialise.The High Court granted the order last Friday with Mr Winsley Militala of Petwin Executor and Trust Company (Pvt) Limited appointed provisional judicial manager.

Horizon had agreed to acquire the bank for a purchase consideration of $27 million, but has not come to fruition despite repeated assurances from the investor.

The application for provisional judicial management was made in anticipation that the deal with Horizon Capital would not be finalised by the time the extended period of a scheme of arrangement to revive the bank would expire on the 31st of last month.

Initially, the court-sanctioned scheme of arrangement was scheduled to expire on October 31, 2014 in light of delays experienced in completing the Horizon transaction. The order for provisional judicial management was granted last Friday.

“Presently, it is increasingly apparent that the Horizon transaction is unlikely to be consummated by the time the scheme expires on the January 31, 2015,” Tetrad said.

“The placement of applicant under provisional judicial management will protect applicant’s assets while it undergoes the recapitalisation process through the Horizon transaction. It is submitted that applicant can be resuscitated to become a success concern if granted time to recapitalise,” the bank said in its High Court application.

Tetrad faced the threat of attachment of its properties and execution by some of its creditors, which would prejudice the assets of the majority of creditors after the Sheriff earlier served the bank with several notices of removal, seizure and attachment.

The bank was failing to honour its obligations such as demand on maturity, deposits and sums due to trade creditors due to severe liquidity challenges, pressure from macroeconomic conditions, non-performing and negative revenue growth.

As such, the applicant entered into a scheme of arrangement with creditors to allow recapitalisation of the bank by Horizon Capital in terms of the agreement with Tetrad.

As at December 31 2014, Tetrad had negative shareholders funds position of $19,8 million while net profit for the same period under review stood at negative $47 million.

The bank’s total equity and liabilities as at that time stood at $68,7 million.

Most small banks in Zimbabwe have faced serious liquidity challenges since dollarisation of the economy in 2009 and the difficult macroeconomic conditions have also made it difficult for the majority of the indigenous banks to secure fresh capital.

This has resulted in the banks either being forced into liquidation or voluntarily surrendering banking licences and becoming automatic candidates for liquidation.

Such indigenous banks include Capital Bank, Interfin, Genesis, Allied Bank and Trust Bank.

Source : The Herald