26 June 2020
ECSPONENT ANNOUNCES SIGNIFICANT DEBT REDUCTION AND RECAPITALISATION PROGRESS AT ITS SIGNIFICANT INVESTMENT, MYBUCKS; SALE OF ITS INVESTMENT IN MHMK CAPITAL AT A PRICE THAT EXCEEDS ITS TARGET IRR OF 30% AND SIGNALS THE FIRST TRIGGER EVENT WHICH WILL SEE HYBRID PREFERENCE SHAREHOLDERS BEING PAID BACK PART OF THEIR INVESTMENT
• MyBucks residual debt of €108 mn as at 31 March 2019 when Ecsponent Limited took
control, has now been reduced by €83 mn to €25 mn.
• Significant debt reduction at Mybucks achieved through a combination of debt to equity
conversion and disposal of assets in Australia, Spain, Poland Namibia, South Africa, Eswatini,
Kenya, Botswana, Mozambique and Zambia.
• Mybucks Malawi operations bolstered by c.€6 mn through introduction of local partner who
will own 49% and Mybucks retains 51%.
• MyBucks board significantly bolstered with the appointment of Craig Lyons and Patrick
Matute (previous Ecsponent Limited directors).
• Ecsponent achieves first trigger event for classes D and G hybrid preference shareholders
through the disposal of its investment in MHMK Capital to black founding members of
Ngwedi Capital at a price that exceeds the target IRR of 30%.
26 June 2020,
Pretoria. Private equity firm Ecsponent Limited (“the Company” or “the Group”) today updated stakeholders on various interventions implemented by its new board of directors, following the Company’s extensive consultation with shareholders and Extraordinary General Meeting held on 27 May 2020.
George Manyere, CEO of Ecsponent commented: “We are pleased to update shareholders on our efforts to turn-around the legacy underperformance of MyBucks and continue with our efforts to have a healthy balance sheet. “We have made further progress in our efforts to turnaround the legacy underperformance at our biggest investment, Mybucks, and this has seen the disposal of additional assets and the reduction of residual debt by an additional €26.5 million.”“Since taking over control Mybucks last year, Ecsponent has led initiatives that have seen Mybucks residual debt being reduced by €83 mn from €108 mn as at 31 March 2019.”,” Manyere added. Furthermore, Ecsponent has made progress with strengthening the corporate governance at Mybucks through the appointment of its former directs, Mr Craig Lyons, who will become Chairman of Mybucks while Mr Patrick Matute will become an Executive Director of Mybucks.
“Strengthening of governance at MyBucks is critical in our turnaround efforts and the appointment of Mr Lyons and Mr Matute further complements the progress made to date and will underpin ongoing efforts to reposition Mybucks operations as credible, profitable impact banks in their markets.”
In terms of an announcement* made by Frankfurt listed MyBucks on 23 June 2020, the company completed its second phase of financial restructuring by reducing external debt by approximately €26.5 million through the disposal of operations in Botswana and the sale of equity stakes in Mozambique and
Zambia. Further progress has been made at MyBucks Malawi operations which has been strengthened through the introduction of a local partner who will become a 49% shareholder through the investment ofapproximately €6 million in the bank. Ecsponent further announced the disposal of its investment in MHMK Capital to the black founding members of Ngwedi Capital Holdings for a profit. “The disposal of our investment in MHMK Capital to black founding members of Ngwedi Capital was done at a price that exceeded our target IRR of 30% and this disposal is the first trigger event for classes D and G hybrid preference shareholders which will see the hybrid preference shareholders being repaid part of their investment” Manyere explained. Manyere further commented: “The purchase consideration on the MHMK Capital is payable to Ecsponent on or before 31 December 2020 and we will announce particulars of distribution to these classes of hybrid preference shares at an appropriate time at a future date, taking into consideration the provisions of the Companies Act (No 71 of 2008), terms of the Company’s Memorandum of Incorporation, consideration received and operational and cashflow requirements of the Company. “We remain focused on the optimal structuring of our underlying portfolio and are particularly excited about our investments in renewable energy, impact banking and resource extraction. Despite the impact of COVID-19 we remain confident of our strategy as outlined to stakeholders during our interactions,” Manyere concluded.
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