Presentation to Portfolio Committee 14 February

Transcript:Presentation to Portfolio Committee 14 February:
Presentation to Portfolio Committee 14 February 2018 Presentation outline 2 Executive Summary and Background sefa’s differentiation from commercial financiers The role of Post Investment Monitoring and Workout Standard operating procedures Post investment strategies What has sefa done – Business Diagnostic analysis Conclusion Approach to Business Rescue sefa has a patient approach to defaulting debtors. Even if a client is in the Legal Book there are continuous engagement and negotiation to find an appropriate solution. sefa does not initiate Business Rescue but will participate in Business Rescue proceedings due to the challenges experienced with Business Rescue specifically with small businesses. sefa prefers to restructure debt timeously. Prior to the transfer to the Legal Book, sefa pro-actively monitors clients and intervene when early warning signals are observed. These interventions mainly consist of the provision of business support (through mentorships) and loan restructurings. The legal process is implemented in compliance with the National Credit Act. If the client comes forward at any stage in the legal process with a reasonable proposal, sefa will usually suspend legal action and the loan can even move back to the Performing Book if the client keeps to that arrangement. 3 Approach to Business Rescue (BR) “Once it has been confirmed that a client could be economically viable, the next step is to determine the optimal solution within a reasonable time line. The following are the guidelines to follow depending on the nature of the transaction. The optimal solution could be achieved through: Financial Restructuring, Turnaround or Business Rescue interventions.” “A client that has been placed under Business Rescue is essentially under a turnaround process and the same process that is recommended for turnarounds should be followed, albeit under the guide of Business Rescue legislation.” “Turnarounds - This refers to Clients where extensive and advanced turnaround work is required and a possibility of a business re-organisation is a real possibility. Examples are: (a) where the business model shows growth potential but requires operational and technical efficiency improvements and other growth strategies to realise potential (b) where sefa exposure is uncovered and sefa will in all likelihood suffer loss in the event of liquidation but there is a belief in the business/management.” sefa systems and procedures & BR (extracts from sefa systems documents) 4 Approach to Business Rescue (BR) BR is NOT applicable for clients that are ALREADY INSOLVENT or ALREADY in a position NOT to honor its debts.