(Alliance News) - Atlas Mara Ltd said Thursday it has entered into definitive agreements with KCB Group PLC for the sale of its banking assets in Rwanda and Tanzania.
Shares in the Africa-focused banking investor were 17% higher in London on Thursday at USD0.40 each.
As part of the deal, KCB will acquire Atlas Mara's 62% shareholding in Banque Populaire du Rwanda PLC for cash consideration representing about 1.09 times book value and, through the company's subsidiary ABC Holdings Ltd, all of Atlas Mara's indirect interests in African Banking Corp Tanzania Ltd for cash consideration representing approximately 0.42 times book value.
The actual cash consideration payable by KCB will be determined based on the final book value of the two banks at completion of the transactions, Atlas noted.
The deals are expected to close during the first half of 2021, assuming regulatory approvals are received by then.
Atlas Executive Chair Michael Wilkerson said: "As previously reported, in 2019 the board of Atlas Mara commenced a review of strategic options. This included a review of each banking operation, and potentially partnering in or exiting markets where we do not have a clear near-term path to acceptable scale and profitability.
"Our reshaping of the group's footprint has accelerated in the face of challenges related to the Covid-19 pandemic and response, and in particular the impact to the economies and financial markets in which the group operates."
Wilkerson noted the investment firm is "exploring all avenues" to ensure its core franchises "weather this downturn".
"We are engaged in discussions with the principal holders of the group's convertible bonds due December 31, 2020 and other creditors regarding a range of options to address the upcoming debt maturities for the benefit of all stakeholders," Wilkerson added.
He continued: "These discussions also aim to provide the company with time to complete these and other transactions consistent with the group's strategic objectives. The company is in the process of raising financing to support its operational funding during the pendency of these transactions, while it continues its efforts to reduce group overhead and operating expenses."
Atlas said the deal with KCB is "another significant milestone" in its broader repositioning.
By Paul McGowan; paulmcgowan@alliancenews.com
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