More Troubles For Ecobank As Deal Reveals How NEDBANK May Soon Acquire 51% Of Its Equity

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Ecobank Plc has been in the news lately for all the right and wrong reasons you can think about. Now a recent Thisday investigation reveals Nedbank of South Africa may soon acquire a significant stake in Ecobank thought a debt equity swap. According to the paper, Ecobank Transnational (ETI) had obtained a loan of $250million from Nedbank which it used to acquire shares in Oceanic Bank. It also obtained another $250million from PIC a South African Pension fund affiliated with Nedbank. Both loans are convertible debt instruments and as such can be converted to equity within the next one year. As Thisday explains;

In order to finance its acquisition of former Oceanic Bank Plc, Ecobank Nigeria, through its parent company, ETI, had secured a convertible loan of $250 million from Nedbank of South Africa. ETI also took another $250 million convertible loan from PIC.

Although the agreement on the loans included a non-controlling clause, which prevents Nedbank and PIC from and taking over controlling interest in the pan-African bank through a debt-equity swap, THISDAY learnt that Nedbank is exploring the possibility of combining with PIC to take up a stake in ETI.

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It was further gathered that the window available to Nedbank and PIC to convert their loans into equity is between November 2013 and November 2014.

Should both Nedbank and PIC convert the loan into equity, the South African bank will acquire up to 20 per cent of the pan-African bank and PIC follows suit, both firms could end up with a direct and indirect stake of 51 per cent of ETI.

Source: Thisday