AfrAsia Capital Management (ACM) creditors on Tuesday voted in favour of saving the company from liquidation saying it should divest from parent company, AfrAsia Bank.
BY OUR CORRESPONDENT
In February, the Reserve Bank of Zimbabwe cancelled the licence of AfrAsia Bank Zimbabwe Limited, a subsidiary of AfrAsia Zimbabwe Holdings Limited (AZHL), as the institution was no longer in a sound financial condition.
The High Court placed the bank under final liquidation on April 29.
ACM managing director Peter Kadzere told creditors at a meeting that a scheme of arrangement was the best option to save the firm as liquidation would result in loss of money.
“The scheme of arrangement is trying to transfer the ownership of AfrAsia Bank to creditors of ACM who were exposed to the bank when it surrendered its licence on February 24,” he said.
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Kadzere said the demise of the bank had caused challenges for ACM in that its clients were exposed to the tune of $4,1 million. He said ACM had invested some funds for its clients secured by negotiable certificates of deposits.
He said the objective of the scheme was to negotiate a debt-to-equity swap with customers and that “there was great scope to turn around the fortunes of the business and drive it forward”.
Established in 1995 as Kingdom Asset Management, ACM specialised in the management of third party clients’ funds.
Kadzere said ACM had since engaged the liquidator, who has advised that the firm could not be treated as a secured creditor of AfrAsia Bank, hence the need for the proposed options to mitigate losses to creditors.
Creditors exposed to AfrAsia Bank include, among others, investee creditors, unit trust clients, existing unit trust funds and the Zimbabwe Revenue Authority.
AfrAsia Bank, Kadzere said, would be paid out $425 000 from its liquidation with the first payment expected towards the end of the year and the amount would be paid to ACM creditors.
Kadzere said the 20 investee creditors of the company, who are owed $2,9 million, would be entitled to 75,73% shareholding.
“But as and when the dividend is paid out by the AfrAsia liquidator, the dividend would be passed on to these creditors pro-rata,” he said, adding that their shareholding would decrease.
Unit trust clients’ outstanding RTGS funds were exposed to the tune of $552 000 and will be allocated 14,25% shareholding in the new rebranded AfrAsia Capital on a pro-rata basis, he said.
Workers will be allocated 10% shareholding while trade and other creditors owed around $92 000 will be paid in the normal course of business.
The company’s assets as at June 30, 2015 (post scheme) stood at $4,8 million while liabilities stood at $646 000.
Mauritius-based financial services group, AfrAsia Bank Limited, which owns AfrAsia, has since pulled out of Zimbabwe.