NEW OFFER

Toronto based firm steps up bid for Imperial Bank's assets

The firm has given KDIC up to December 13 to accept the offer with due diligence by the buyer expected within four weeks of granted exclusivity.

In Summary
  • In the offer letter, the firm said it intends to set up a new company for the purpose of assuming and holding the assets and deposits of Imperial Bank
  • Select employees of Imperial Bank may be transferred to the new company to oversee the performing assets and manage recoveries of non-performing loans
Imperial Bank depositors hold placards outside the Westlands branch. /ENOS TECHE
Imperial Bank depositors hold placards outside the Westlands branch. /ENOS TECHE

Amassment Corporation has submitted its refined offer for Imperial Bank assets worth Sh49.03 billion after the first one was rejected by Kenya Deposit Insurance Corporation (KDIC).

In the revised offer seen by the Star, the American asset holding firm through its Canada-based subsidiary has revised the clause that required the depositors body to invest 20 per cent of deposits in the special purpose vehicle to be fully owned by it.

“No cash capital into NewCo will be required by KDIC. As customary, KDIC’s only expense will be covering any transactional cost associated with the transfer of assets,’’ the firm said.

The firm said it intends to set up a new company to assume and hold the assets and deposits of Imperial Bank, both performing and non-performing loans, as well as physical assets obtained via foreclosure.

The new company will be structured as an asset management company (AMC), a resolution-type SPV registered in a domicile with a strong legal system and transparency.

The transaction will be a debt-for-equity swap whereby the new company will issue uncertified class A preferred shares for full face value to depositors.

This will give depositors full potential recovery of 100 cents on the shilling for their deposit amounts, which will be fully backed by an equal face value of Imperial’s assets.

Just like in the initial offer, the Amassment Corporation will be the sole common shareholder of the new firm.

Select employees of Imperial Bank may be transferred to the new company to oversee the performing assets and manage the recovery of non-performing loans.

A sole office location may be established in Nairobi or another jurisdiction to manage the day-to-day operations of the special purpose vehicle.

Furthermore, Amassment Corporation will establish an advisory board for the new company made up of banking and finance professionals from Canada, the US and Kenya, to establish a long-term strategy, as well as ensuring strong governance and accountability.

An annual dividend will be issued to depositors-turned-preferred shareholders via income earned from loan assets, while NewCo retaining a portion of profits for financial strength, and to execute any future growth or loan acquisition opportunities.

The firm has given KDIC up to December 13 to accept the offer with due diligence by the buyer expected within four weeks of granted exclusivity.

KDIC boss Mohamud Mohamud, however, said he was yet to receive any new offer from the said company.

We will give a detailed response once we receive the offer,” he said.

The firm also expects to close the transaction on or before January 15, 2020, with the new company to issue uncertified preferred shares to depositors upon close.

‘’On behalf of Amassment Corporation, I am submitting this non-binding Expression of Interest for the remaining loan assets and deposit liabilities of Imperial Bank (IB),’’ Amassment Corporation said in a revised offer letter to KDIC.

The firm added that ‘’We believe that our proposal and structure will be highly beneficial to all key parties,taking into consideration the maximum return for depositors, while eliminating any depositor payout for KDIC’’.

KDIC was yet to respond to our inquiries by the time of going to press. The depositors body rejected the first offer from the Toronto based company, terming it as weak.

‘’The offer lacked basic requirement we were looking for,’’ KDIC boss Mohamud Mohamud told the Star.

A significant portion of Imperial Bank’s assets and liabilities are tied up in lawsuits and will remain with the KDIC.

The lender was put under receivership in 2015 after it emerged that it was operating two sets of books, with a potential fraud of Sh46 billion, putting depositors’ funds at risk.