PE firm drops cash request in fresh Imperial Bank bid

Canadian private equity firm Amassment Corporation has made a new offer to take over the assets of collapsed Imperial Bank, dropping its earlier proposal to have the Kenya Depositors Insurance Corporation (KDIC) to fund its bid.

In the new offer seen by Business Daily, Toronto based Amassment Corporation says the KDIC, Imperial’s receiver-manager, will now only pay for incidental costs of transferring Imperial’s assets to a new company to be controlled by the PE firm.

“No cash capital into NewCo will be required by KDIC. As customary KDIC’s only expense will be covering any a transactional costs associated with the transfer of assets,” the PE firm says in the second offer.

Amassment had initially asked the KDIC to pay 20 per cent or the full amount claimed by depositors to partially compensate for value declines sustained by loan assets, associated litigation costs, as well as losses from non-performing loans that NewCo will assume.

In turn, the company was to take over all deposits and an equal sum of loans including 50 percent of loans tied up in litigation.

The KDIC rejected the first offer by the company last month, saying it is not credible.

Chief Executive Mohamud Ahmed also added that the proposals were not acceptable.

The revised bid has retained the other terms, offering depositors claiming Sh49 billion preference shares in the new company.

The preference shares will earn unspecified yearly dividends for income made from recoveries of the loan assets while the company retains some of the revenues for growth and buying future loans.

Amassment says depositors who would wish to liquidate their stake in the future will have the option of selling in a private placement or exit once the company is listed on a public stock exchange.

The PE firm’s proposals are unusual in a market where most bank failures have been resolved through selling the institutions to other stronger banks or by the KDIC liquidating their assets.