By Almot Maqolo.
HARARE – (News of The South) -The Zimbabwe Asset Management Company (ZAMCO) which has acquired about $1.19 billion of Non-Performing Loans (NPLs) in the market, says it will now be focusing on resolving and collection of debts in the next 5 years.
In 2018, the government suspended the acquisition of NPLs by ZAMCO as part of a strategy to contain the country’s domestic debt.
CEO Cosmos Kanhai said the special purpose vehicle still has got 5 years to resolve NPLs and repayments have been put on 8 years.
“So if there are some not resolved, we still have 2 years for the 10 years to foreclose but obviously we do not wait for the 8 years. Those that we see no prospects or turnaround, we can either foreclose them and that is why you see some of them sent to courts as there is no need for us to wait for 8 years because there is no prospect or turnaround,” he said.
“Not every NPL that comes to ZAMCO is given repayment schedule, it is only when you are restructured and pay using agreed cash flow.”
Failure to manage means you cannot get the 8 year window but you will have to use other resolutions methods like debt equity swap, debt asset swap.
“That is why most of the people now selling their assets and pay as of opposed to go to the courts. So they would prefer to take advantage of inflation, sell off their assets and then pay ZAMCO,” he said.
On the Treasury Bills (TBs) redemption sinking funds, Kanhai said the biggest one was 15 years. The maturity profile ranged from 10-15 years.
“For ZAMCO – currency changeover it is a zero sum game because the people are paying RTGS$ and on the TBs they are going to pay in RTGS. Also the government did not pay for TBs we gave them. TBs are going to be paid in the form of bonds at the end. So it is a zero sum game because they have got long maturity,” he said.
He denied the notion that ZAMCO took up a lot of politically exposed person’s bad loans.
“Remember these loans are from banks. It is a reflection of lending practice of banks because we buy them as portfolio offer,” he said.
“It is not ZAMCO who determines which NPLs to acquire. So there is no way we can say we are going to take over a specific group of NPLs.”
Previously, they have been talks in the market about ZAMCO considering disposing its 57.4% stake in Star Africa.
“It also depends, we have got a sunset period of 10 years up to 2024 so along the way we will just see whether it is an appropriate time to exit because we do not exist in an entity for perpetuity. So at an appropriate time we can then sell our shares and exit.”
The sugar manufacturer, is among some of the companies that were on the verge of collapse because of debt and spiraling finance costs but were assisted by ZAMCO through non-performing loans (NPL) resolution processes. Other companies include, RioZim, the Cotton Company of Zimbabwe, Cairns, The Wattle Company, Chemplex Corporation and David Whitehead.
NPLs acquired by ZAMCO emanated from bad debts of firms that were burdened by high interest loans, but which if relieved of the constraint, had potential to turnaround.
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