R600m to be paid to funders of Old African Bank

Johannesburg - African Bank has announced that holders of the subordinate stub instrument of Residual Debt Service Limited (under curatorship) (RDS) are set to receive an extra-ordinary payment of R600m, bringing the total paid out to funders of the old African Bank to R8.45bn.

The bank said indemnity provided to the new African Bank of R500m expired on 4 April 2024 and there were no claims under such. Thus, R500m is now available for distribution to holders of the subordinate stub instrument, and in addition, the curator, Craig Du Plessis, has reduced the operating float from R300m to R200m, resulting in a further R100m available for distribution. Therefore, a total distribution of R600m will be made to the subordinated stub holders on 24 April 2024, it said.

African Bank was placed under curatorship in August 2014, and two years later, a new entity was created. As part of the successful restructuring and resolution, the majority of the debt was transferred to the new African Bank, leaving behind material liabilities in RDS. These residual stub instruments entitle payments from RDS to both senior and subordinate stub holders, in accordance with a distribution waterfall.

In November 2022, new African Bank and RDS reached an agreement to reduce the indemnity and indemnity reserve from R3bn to R500m. The curator of RDS also reduced the operating float from R500m to R300m, which resulted in R2.7bn being available to fully repay the senior unsecured stub instruments holders of RDS, and make a first part repayment to the subordinated stub instrument holders.

The curator intends to continue to make 6-monthly distributions of the surplus funds collected to the holders of the subordinated stub instruments, in accordance with the terms of such instruments. Following this payment scheduled for 24 April 2024, senior unsecured and subordinate stub holders will have received R8.45bn in total.

African Bank Group CEO, Kennedy G Bungane says "We are delighted that we have been able to reach this point where the indemnity has expired, allowing a further payment to be made to subordinate stub holders of RDS."

The curator of RDS, Craig Du Plessis says "We are pleased to be in a position to make a further payment to the subordinate stub holders. The ongoing collaboration between RDS and African Bank, since the restructuring was concluded in April 2016, is commendable. The book continues to be managed well and with strong collections, it has resulted in another milestone achievement that has further benefited stub instrument holders and the new African Bank."