Land Bank close to completing restructuring plan

South Africa’s state-owned agricultural lender Land Bank is close to finalising a liquidity and debt restructuring plan after it missed loan repayments this year and had its credit rating cut, it said on Wednesday.

A statement from the company said that the plan under discussion with lenders and the National Treasury is intended to raise a R3 billion ($174 million) liquidity facility from lenders and extend terms of all debt maturing in the next 12 months.

“Negotiations around the liquidity facility are ongoing, with the process anticipated to be finalised within the next fortnight, depending on negotiations with providers of this facility,” the bank said in the regulatory announcement.

Land Bank aims to finalise the broader restructuring plan by September, pending treasury and parliamentary approval. It said the aim is to pay all missed interest instalments while existing debt will be “credit-enhanced and re-priced”, including the listing of new debt.

The Land and Agricultural Development Bank of South Africa (Land Bank), the country’s largest agricultural-focussed lender, defaulted on loans totalling R50 billion in April and in June failed to meet interest payments of nearly R120 million.

The bank’s liquidity crisis sparked fears that it would trigger a sovereign debt default. About R5.7 billion of Land Bank’s debt is guaranteed by the government, which has said it cannot afford to recapitalise the bank as its fights the economic fallout from the COVID-19 pandemic.