South Africa’s largest lender to farmers is seeking to exit default on its debt by the end of March, potentially marking the end of a two-year saga that’s raised concern other indebted state companies will follow suit.
The Pretoria-based Land & Agricultural Development Bank of South Africa has been struggling to find a way forward since missing a loan repayment in April 2020 that triggered a cross-default in notes issued under a R50 billion bond programME.
“We hope to get it out of default by the end of the financial year,” Chairwoman Thabi Nkosi said in an interview on Tuesday. “We are already in advanced talks with lenders,” with 28% of liabilities having been settled, she said.
The Land Bank has been seen as a potential harbinger for how debt at other struggling state companies will be handled. Arms maker Denel last week said it was seeking government help after missed bond payments put it at risk of default. Eskom, the national power utility, has R392 billion of debt and is dependent on state bailouts.
The government has committed R7 billion in support for the Land Bank over the next three years, having already paid in R3 billion in the form of a bailout.
Futuregrowth Asset Management, a creditor that has previously described proposals made by the Land Bank as “unsatisfactory,” declined to comment.
Nkosi’s comments come after the Land Bank announced that Chief Executive Officer Ayanda Kanana had resigned, along with Litha Magingxa, who oversaw agricultural economics and was acting head of strategy.
“The new board was appointed late last year with a clear mandate. We needed to clean house and very specifically deal with the challenges, we found an organisation where internal controls were in a dismal state,” she said. “The CEO joined the bank at a time when it was already difficult. That 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.