Untu to increase bond security

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UNTU Capital (Untu) says it has received bond-holder approval to increase the security for its $4 million bond issued in 2017.
This comes as the bond’s guarantee by a Mauritian firm was suspended last year after the micro-lender failed to remit fees to the underwriter due to foreign currency shortages in Zimbabwe.
Untu last week said note-holders had “unanimously” approved special resolutions to give effect to the changes in an extraordinary general meeting held in Harare on April 3, 2019.
“The issuer proposes to increase the immovable properties to secure the issuance from $2,5 million to $3,75 million. In addition, the issuer proposes to cede an additional $500 000 of loan book debts secured by immovable to take the overall loan book ceded to $2 million,” read the primary resolution.
Untu says the note holders also approved a special resolution to amend the trust deed of the bond “to reflect the new security arrangements”.
According to the statement that was issued by the micro-lender last week, the deed will be amended to include the phrase: “This note shall be secured by a guarantee granted by the guarantor and/or additional security shall be provided by the issuer”.
Following the suspension of the guarantee on the note, Untu had announced that, apart from “working with the trustee of the note-holders to increase the security offered on the instruments”, it would continue to engage the Reserve Bank of Zimbabwe, through its bankers, for an allocation of foreign currency for the amounts due on the guarantee.
The bond, floated through a mobile platform to produce an initial offering that was the first of its kind in the country, was something of a financial inclusion breakthrough after the results of its initial public offering (IPO) showed that it was taken up largely by ordinary people.
Clive Msipha, the micro-lender’s chief executive officer, told The Financial Gazette that the bulk of the participants in the IPO were “ordinary individuals”, as opposed to just institutional investors, which has ordinarily been the case with such instruments.
Untu says about 2 500 of the 2 526 participants in the IPO of the first tranche of the bond were individuals.
Msipha said the average investment for the note was less than $400, with some of the participants in the IPO investing “as little as $100”.
However, things came to a head last year when Zimbabwe’s debilitating foreign currency crunch saw the financial institution failing to honour its dues.
This comes as the country’s intensifying foreign currency shortage has threatened the viability of businesses from a number of sectors in the economy of the struggling southern African country.