Tetrad to offload Zimplow stake?

Published: 02 December 2013

Tetrad Holdings Limited intends to dispose of its 27 percent stake in agriculture and mining implements company Zimplow Holdings to raise capital for its banking division, Tetrad Investment Bank.

The financial group owns about 38,5 percent shareholding in the Zimbabwe Stock Exchange-listed company.

However, some of the shares were pledged as security against loans borrowed by the bank, including from one of the country's major pension funds. While the specifics of the deal could not be established, sources familiar with the developments said Tetrad Holdings was in discussion with potential buyers of its shareholding in Zimplow.

"The group is looking for buyers of its shareholding in Zimplow and they are talking to a number of potential buyers," said one source who requested not to be identified. "They have close to 39 percent but it can only sell 27 percent stake because some of the shares were pledged as security for money borrowed by the bank."

Tetrad's strategic focus is on mining, agriculture and property. The group used to have an investment in another listed entity TSL but sold the stake and bought the Zimplow stake. Sources say that two years ago the group was offered US11 cents for the stake but turned it down. Zimplow has lost value since its merger with Tractive Power and is now trading at US4,1 cents.

Commercial banks are required to have a minimum capital of $100 million by end of June next year. While no comment could be obtained from Tetrad group chief executive Mr Eugene Mlambo by the time of going to press yesterday, group chairman Mr Miccah Moyo said in a statement that despite recapitalising the bank to the tune of $24 million, the bank's capital remains below the minimum capital requirement. He said the group was in discussion with potential foreign investors "which should see the entity's capital levels increasing and should also give the bank access to external lines of credit". The group published its delayed results for the six months to March 31 2013 on Saturday but is yet to release results for year ended in September.

The deadline for September results was November 30.

In the six months to March 31 this year, Tetrad Holdings made a loss of $2,8 million, down from $5,4 million loss made a year earlier. Net operating income was down to $5,4 million from $12,2 million.

During the period, the bank made an operating loss of $3,8 million compared to a profit $724 122 in the same period last year. A comprehensive loss of $8,5 million compared to a profit of $349 112 a year earlier.

In the same period, total income declined by 18 percent to $3,4 million while operating expenses grew 31 percent to $4,6 million. Deposits for the period grew by 8 percent from $88,2 million to $96 million.

TIB is among the small indigenous banks that have been struggling to meet its financial obligation, including funding withdrawals. The others include Trust Bank and Metropolitan Bank. The banking sector continues to suffer from a plethora of problems ranging from general market illiquidity, non-performing loans and at the same time lack of adequate capital levels.

In terms of its capital, the group closed the March period at $33,21 million with the investment bank at $26,47 million. The bulk of the $33.21 million was largely made up of non-distributable reserves at $25,37 million.
- herald