The Land Bank has reached a landmark agreement with its international and local lenders on the restructuring of its debt after several attempts over roughly the past four years.
The agreement will cure the bank's default on R40bn of its debt which occurred in April 2020. Its default on certain payment obligations triggered a cross-default on most of its debt.
Details of the agreement will be released at a media briefing on Monday when the bank will provide information about its strategic direction.
According to the bank’s 2023 annual report, R5.1bn of the R10bn recapitalisation allocated to the bank in 2020 had been held in an escrow account pending finalisation of a debt restructuring.
“This is a significant milestone that provides a basis for the bank’s turnaround and rebuilding of its essential role in the SA economy and the agricultural sector in particular,” the Government Communication and Information Systems media statement said.
The bank has been negotiating with lenders since 2020 to reach agreement on a debt restructuring process, which was complicated as it involved multiple lenders and diverse financial instruments.
In the annual report the bank said the “regrettable” delay in reaching an agreement had hampered its ability to provide vital sector funding and had led to a significant reduction in its loan book. By mid--2023 the bank had repaid R23.5bn of the debt outstanding at the time of default.
In prior years the failure to reach an agreement on the debt restructuring prompted the exodus of critical staff.
Business Day reported that the bank made a R97m loss in the nine months to end-December 2023 when it had budgeted to make a profit. It also has R9.7bn in non-performing loans (which are unlikely to be paid back).
With the reconfiguration of government departments in the government of national unity, and the separation of the agriculture department from land reform and rural development, agriculture minister John Steenhuisen wants Land Bank to fall under his department rather than National Treasury.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.