Friday, May 13 2022

(Bloomberg) – South Africa’s biggest lender to farmers is seeking to emerge from debt default by the end of March, potentially marking the end of a two-year saga that has raised fears that other indebted public companies do not follow his example.

The Pretoria-based Land & Agricultural Development Bank of South Africa has struggled to find a way forward since it missed repayment of a loan in April 2020, which triggered a cross default of notes issued in as part of a 50 billion rand ($3.2 billion) bond program.

“We hope to get it out of default by the end of the fiscal year,” President Thabi Nkosi said in an interview on Tuesday. “We are already in advanced talks with the lenders as 28% of liabilities have been settled, she said.

The Land Bank has been seen as a potential harbinger of how the debt of other troubled state enterprises will be handled. The arms manufacturer Denel SOC Ltd. said last week he was seeking government help after missed bond payments put him at risk of default. Eskom Holdings SOC Ltd., the national electricity utility, has a debt of R392 billion and depends on government bailouts.

The government has committed R7 billion to support the Land Bank.

Nkosi’s comments come after the Land Bank announced the resignation of chief executive Ayanda Kanana, as well as Litha Magingxa, who oversaw agricultural economics and led strategy on an interim basis.

“The new Board of Directors was appointed at the end of last year with a clear mandate. We needed to clean house and address the challenges very precisely, we found an organization where the internal controls were in a terrible state,” she said. “The CEO joined the bank at a time when it was already difficult. This can exacerbate stress and we sympathize with that, but we will continue to address these issues. »

Kanana declined to comment. He will leave the bank at the end of April and a replacement is being sought, with interim measures to be announced, Nkosi said.

(Updates with third paragraph debt details, Nkosi comments throughout)

©2022 Bloomberg LP

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