Tetrad Bank expunges balance sheet, eyes investors

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Presently defunct financial institution, Tetrad Investment Bank (TIB), is looking to revive operations after a scheme of arrangement that tidied its balance sheet was approved recently.

The new scheme of arrangement entails a debt into equity conversion and payment in cash to proven depositors and creditors.

TIB’s operations were halted by the Reserve Bank of Zimbabwe (RBZ) early in 2015 after it failed to mobilise funding to boost its capital base, after a prolonged scheme of arrangement.

It was subsequently placed under provisional judicial management of Mr John Chikura, CEO of the Deposit Protection Corporation (DPC).

At its closure, Tetrad had a negative core capital of $32, 7 million when it was supposed to have a minimum core capital of $25 million as per regulatory requirements.

The DPC however today said the recently approved scheme of arrangement had resulted in the troubled bank’s equity approaching RBZ requirements.

“Members and creditors of Tetrad Investment Bank…recently voted for a scheme of arrangement involving a partial cash payment and conversion of debt to equity.

“This results in a clean balance sheet with the bank’s equity approximating the minimum capital threshold of $25 million,” said DPC.

“The provisional judicial manager is therefore calling on interested potential investors to submit their expression of interest to acquire in whole or in part, equity interest in Tetrad.”

At the time of its closure, the bank owed its depositors and creditors in excess of $67, 4 million.

The move to revive the bank as opposed to liquidate it was initiated at a creditors’ meeting in December last year.

According to minutes of the December meeting, provisional judicial manager Mr Chikura suggested:

“The basis of the new entity will comprise assets of TIB that have been reduced to between $20 million – $30 million. At our last meeting with DPC, we were provided with a list of TIB assets and the top 20 debtors to the bank.

“Creditors will become the major shareholders and the assets will be used to provide a return to creditors.”

Sources close to the developments say a proposal to liquidate the bank was turned down as creditors and depositors saw a possibility of never being able to recover their monies.

The sanctioning of the latest scheme of arrangement points to consent between Tetrad Holdings and the current TIB shareholders over the way forward.

Tetrad is a subsidiary of Tetrad Holdings established in 1995 and comprises an asset management company, TFS Management Company, a micro-finance company, Multiridge Finance, an insurance company, THI Insurance, and a property development and management company, Tetrad Properties.

The DPC had once offered TIB for sale but it did not manage to get any fitting suitors.

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