“It’s very small,” Stephen van Coller, head of Johannesburg-based Absa’s investment-banking unit, said in a telephone interview today. The bank’s provisions for bad debts would cover any losses from the loan, he said.
First Strut, a South African manufacturer supplying the transport, mining and power industries, was placed in provisional liquidation on July 16, said John Louw, a business rescue practitioner appointed for the 5,000-person firm. First Strut has 925 million rand of floating-rate notes outstanding, according to data compiled by Bloomberg.
Investec Plc (INVP) said earlier this week that its 240 million-rand loan to First Strut was “fully secured on underlying collateral which is predominantly property.”
South African financial services companies, including Rand Merchant Bank, FirstRand Ltd. (FSR), Sanlam Ltd., Nedbank Group Ltd. (NED) and Standard Bank Group Ltd. (SBK), plus its fund manager Stanlib, have declined to comment on how much money they have at risk through First Strut, citing “client confidentiality.”
First Strut went into liquidation after the murder of Chairman Jeff Wiggill last month in Soweto, southwest of Johannesburg. Wiggill’s shooting was a “hit,” the Johannesburg-based Star reported today, citing the bail application of one of the men arrested for his killing.
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