subject: Blue deal complete, Mayibuye now majority shareholders [print this page] Blue deal complete, Mayibuye now majority shareholders
Following the conclusion of the funders' agreement, Mayibuye Group has announced that it is subscribing for shares in Blue Financial Services today. This means that Mayibuye Group is now the majority shareholder of Blue. In terms of the lengthy and complex recapitalisation transaction, private equity company Mayibuye Group has acquired an effective 61% shareholding in the pan-African micro-financier.
As a result of the transaction, Blue's financial position has improved considerably, due to R488-million of new proposed capital. This is comprised of R163-million from Mayibuye through the subscription of shares, and the proposed conversion of up to R325-million of debt to equity, which will be presented to shareholders in the near future. This also sends a strong signal that the funders believe in the future prospects of the Blue group based on the turnaround strategy.
The implication is that Blue will have access to almost R1-billion over the next three years for the growth of Blue's loan books. This is made up of R300-million in terms of a claim purchase agreement facilitated by Mayibuye, by which loans are sold to a special purpose vehicle. In addition to that almost R700-million will be provided by the existing funders of the business in terms of the Debt Rescheduling Agreement, together with the cash components of the increase in capital.
With the deal now complete, the appointment of the new Blue board of directors will become effective today. Mayibuye CEO Johan Meiring has led the turnaround of Blue since September and his role as CEO of Blue has now been formalised.
"It has been a long process and I am delighted that the deal has been successfully concluded," says Meiring. "I am grateful to the funders of Blue who have acted in a professional and very responsible manner throughout the process."
Under Meiring's leadership, Mayibuye has begun the implementation of a holistic turnaround strategy for Blue with a focus on restarting the company's lending operations, cutting costs and ensuring that Blue's compliance procedures are stepped up. According to Meiring, this is all part of the process of returning Blue to profitability.
"We have started implementing the recovery strategy for Blue, but plenty of hard work still lies ahead for us," Meiring adds. "We are now in the process of transforming Blue into a thriving pan-African group that will live up to its new core values of Respect, Reliability and Returns."
Blue currently operates in 14 African countries.
For more information, visit www.mgroup.co.za
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