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StanChart in P400 million recapitalization

Standard Charted Bank of Botswana (SCBB) announced  on Thursday this week an intention to raise capital amounting to a total of 400 million pula in order to continue meeting  the minimum capital requirements of Bank of Botswana, and to create a cushion against unexpected impairments caused by a difficult business environment .

The Botswana Stock Exchange (BSE) listed bank which registered losses last year due to tough trading environment explained the capital will be raised by way of an issuance of Undated Unsecured Non Cumulative Subordinated Capital Securities to its parent company Standard Chartered Bank (SCB), which is incorporated in England.

 As of January 31st 2018 Standard Chartered Bank Global held 0.831% of the issued ordinary shares of SCBB. The Group outfit is also a holding company of Standard Chartered Holdings (Africa), the latter, as at the last practicable date 31th January 2018 held 74.156% of the issued ordinary shares of Stan Chart Botswana. The terms of the Capital Securities will be documented by way of an agreement between SCB and SCBB.

According to the statement As at 31 January 2018, SCBB had BWP 247.26 million of Tier 2 Capital in issue in the form of subordinated notes issued under the Company’s P500million Debt Issuance Programme and as well as subordinated debt in the total sum of BWP 389 million owing to SCB-StanChart Global.

“In order to continue to meet the minimum capital requirements of Bank of Botswana, and to create a cushion against unexpected impairments caused by a difficult business environment SCBB intends to issue the Capital Securities in the total amount of BWP 400 million, which will comprise Additional Tier 1 Capital for the Bank, to SCB and utilize part of that capital to retire the BWP 247.26 million of Tier 2 Capital by exercise of SCBB’s right of redemption,” explained the statement.

The announcement further submits that the pricing shall be the distribution rate which shall be the bench mark rate plus the spread. The distribution rate means the rate in percentage per annum, notified by the Issuer to the Security Holder, equal to the yield on the Government of Botswana bonds, having a maturity of five years as set forth in the Bank of Botswana PULF Reuters page that is published daily by the Bank of Botswana at 1500hrs July 26 2018

In trading period ended December 2017 StanChart Botswana registered a 6 % decline in income compared to the previous year ended December 2016. This was a result of slight contraction in the company‘s market liquidity and persistent low interest rates. Another contributing factor to StanChart losses was material increase in loan impairments primarily on the back of one exposure in Corporate and Intuitional Banking from the Diamond and Jewelry Sector. The company has since as part of the re-bounce strategy decided to exit the sector.


Further highlights in the company‘s 2017 performances reveals that the Bank suffered diminishing margins as net income declined by 3 percent points. The margin compression is reported to have been led mainly by increasing costs of deposits. Operational expenses excluding impairment increased by 15 % due to continuing technical support and investment in staff.

The bank  ‘s performance per segment reveals that Corporate & Institutional Banking revenue shrunk by a whopping 57 million pula as expenses  rose  by  40.5 % . Retail banking performed very well registering a profit before tax of 123 million pula and a decline on impairment of 80.2 %. The bank’s commercial segment also contributed to the company’s losses in this period under review by recording a loss before taxation of 4.6 million pula. The Bank however managed to reduce the segment‘s operating expenses by 49 %

With the capital raising the Bank notes that the transaction does not involve any assets. It is a capital injection which results in the creation of an asset in the form of cash and a liability of the same amount with a zero net impact. “The effect on the net asset per share is nil,” underscored the statement.

The transaction will benefit SCBB by ensuring an adequate capital position for the bank and provide it with the ability to support asset growth in line with its strategic agenda. “This will assist SCBB to carry out its normal business activities effectively and without possible impediments, which will enhance the performance and soundness of the organization for the future benefit of its shareholders,” observes the Stan Chart Board.

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Matsheka seeks raise bond program ceiling to P30 billion

14th September 2020
Dr Matsheka

This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.

“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.

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Lucara sits clutching onto its gigantic stones with bear claws in a dark pit

14th September 2020
Lesedi La Rona

Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.

A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.

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Botswana Diamonds issues 50 000 000 shares to raise capital

14th September 2020
Diamonds

Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.

A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.

Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.

In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.

The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.

In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.

Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.

The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”

In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.

Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.

The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.

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