Investec Bank Has $25 Million at Risk in First Strut

Investec Plc (INVP), the owner of a bank and money manager in South Africa and the U.K., loaned about 240 million rand ($24.8 million) to First Strut Ltd., the Johannesburg based company which is in liquidation.

The debt is “fully secured on underlying collateral which is predominantly property,” Ursula Nobrega, head of investor relations at Investec in the city, said in an e-mailed response to questions late yesterday. Investec Asset Management, the company’s money management arm, has invested client funds in First Strut bonds, said Nobrega. That unit declined to disclose details of client exposure in a separate statement yesterday.

First Strut, a manufacturer supplying the transport, mining and power industries, was placed in provisional liquidation on July 16, said John Louw, business rescue practitioner for the firm that employs more than 5,000 people. That came after Jeff Wiggill, chairman of the company which also trades as First Tech Group, was murdered last month.

Wiggill, 59 was found next to his car in Soweto with bullet wounds to his head, the South African Press Association reported June 20. His wallet and mobile phone were missing and the motive for the killing was unknown, SAPA said, citing police captain, Augustinah Selepe.

First Strut Chief Executive Officer Andris Bertulis was unavailable for comment yesterday, according to an e-mailed response from Megan Bell at First Tech Group.

Standard Bank Guarantee

First Strut, which sold 450 million rand of senior secured bonds in 2011, has 925 million rand of floating-rate notes outstanding, according to data compiled by Bloomberg. Global Credit Ratings withdrew its coverage of First Strut bonds this month, after initially rating them BBB.

Standard Bank Group Ltd. (SBK), Africa’s largest bank, had a performance guarantee facility with First Strut worth 103.3 million rand, according to a document, created by Johannesburg law firm Bowman Gilfillan, which is on First Strut’s website.

Standard Bank declined to comment because of client confidentiality agreements, said Ross Linstrom, a spokesman for the Johannesburg-based lender.

“Nedbank is one of a number of financiers that has credit exposure to the First Strut Group of companies and is adequately provided,” Mike Brown, the bank’s chief executive officer, said in an e-mailed response to questions late yesterday.

Rand Merchant Bank, the investment banking unit of FirstRand Ltd. (FSR), acted as lead manager for the sale of First Strut’s 925 million-rand bond. With First Strut under provisional liquidation, RMB doesn’t want to comment on the matter, spokeswoman Joandra Griesel wrote in e-mailed comments.

Standard Bank fell 1.3 percent to 109.10 rand by the close in Johannesburg while Investec declined 0.3 percent to 68.56 rand. FirstRand rose 0.7 percent to 28.99 rand.

To contact the reporter on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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