Equity closes deal to acquire Spire Bank

[Cortedivoire]

Equity Bank has concluded negotiations to buy Spire Bank, setting the stage for the signing of a deal that is expected to get the teachers-owned bank out of a financial crisis.
A source with direct knowledge of a Thursday meeting that endorsed the deal dubbed Project Gamma told the Business Daily that Equity will sign the deal today (Monday).
“Project Gama was approved after a very long meeting on Thursday. Equity Bank is expected to sign the deal around midday Monday,” the source said.
The deal will see Mwalimu Sacco, which owns Spire Bank, pay Equity an additional Sh1.7 billion to cover liabilities.
Insiders say Equity will get a bargain onboarding teachers' deposits and has the muscle to recover the Spire Bank’s bad books.
The top-tier lender will take over just under Sh900 million in assets and Sh1.3 billion in liabilities.
The half-a-billion-shilling difference, employee costs, claims and litigations amounting to Sh1.7 billion will be borne by Mwalimu Sacco.

 

[Aviator]

top-tier lender will take over just under Sh900 million in assets and Sh1.3 billion in liabilities.

Assets (900m)-liabilities (1.3bn)= -400m.

The deal will see Mwalimu Sacco, which owns Spire Bank, pay Equity an additional Sh1.7 billion to cover liabilities.

Why then is Mwalimu sacco paying 1.7bn?
Shouldn't they pay 400m?

 

[Okiya]

Assets (900m)-liabilities (1.3bn)= -400m.


Why then is Mwalimu sacco paying 1.7bn?
Shouldn't they pay 400m?

It's called Cherry picking.

 

[Aviator]

It's called Cherry picking.

Educate us pls.
Sisi hesabu ikipita one fifty hatuielewi.

 

[shocks]

Assets (900m)-liabilities (1.3bn)= -400m.


Why then is Mwalimu sacco paying 1.7bn?
Shouldn't they pay 400m?

Ulishindwa kusoma last paragraph

The half-a-billion-shilling difference, employee costs, claims and litigations amounting to Sh1.7 billion will be borne by Mwalimu Sacco.

Merali alipeleka walimu to the cleaners

 

[Aviator]

Ulishindwa kusoma last paragraph



Merali alipeleka walimu to the cleaners

Still not getting it.
As in, Mwalimu Sacco is giving the bank to ekwiti, and on top of that wawalipe 1.7bn?
What if they just decide to bankrupt? What's the logic behind it?

 

[Ubongo]

Ulishindwa kusoma last paragraph



Merali alipeleka walimu to the cleaners

Their own directors led them to the slaughter house

 

[Okiya]

Educate us pls.
Sisi hesabu ikipita one fifty hatuielewi.

The buyer in this case Equity will perform a due diligence review which is mainly to confirm the existence, completeness and valuation of balance sheet amounts. Thereafter Equity will decide what assets and liabilities it will want to absorb. For instance, if the seller in this case Mwalimu has liabilities such as legal cases in court or tax disputes, Equity will decide it will not take those up.

 

[mzeiya]

I was present as the bank was launched with much fanfare and promoted to the KESSHA members pale Mombasa Wild Waters. Wish the teachers knew manze

 

[shocks]

Still not getting it.
As in, Mwalimu Sacco is giving the bank to ekwiti, and on top of that wawalipe 1.7bn?
What if they just decide to bankrupt? What's the logic behind it?

Bank haiwezi fungwa hivyo tu juu kuna the issue ya CBK trying to protect depositor funds. Tho hiyo 1.7 itatoka tu kwa depositor funds bado, big depositors wanaenda kunyolewa, utapata parastatals hapo

 

[Aviator]

The buyer in this case Equity will perform a due diligence review which is mainly to confirm the existence, completeness and valuation of balance sheet amounts. Thereafter Equity will decide what assets and liabilities it will want to absorb. For instance, if the seller in this case Mwalimu has liabilities such as legal cases in court or tax disputes, Equity will decide it will not take those up.

What deal was discussed then?

Bank haiwezi fungwa hivyo tu juu kuna the issue ya CBK trying to protect depositor funds. Tho hiyo 1.7 itatoka tu kwa depositor funds bado, big depositor wanaenda kunyolewa, utapata parastatals hapo

Aren't deposits protected by CBK?
If the bank didn't get a buyer, what would be it's ultimate fate?

 

[Okiya]

What deal was discussed then?

I don't know about the Equity deal. But what I've told you is from my own personal experience of what happens.

 

[Ubongo]

What deal was discussed then?

Aren't deposits protected by CBK?
If the bank didn't get a buyer, what would be it's ultimate fate?

Long term closure

 

[Aviator]

Long term closure

Who loses?

 

[Ubongo]

Who loses?

Definitely Mwalimu.....all along they have been making loses. Getting cash from the sacco to sustain a loss making bank every year since it opened it's door

 

[Aviator]

Definitely Mwalimu.....all along they have been making loses. Getting cash from the sacco to sustain a loss making bank every year since it opened it's door

My question is, if you have a loss making biz, do you pay someone to take it over, or just close it?
Coz Mwalimu seems to be paying someone to take it over

 

[Ubongo]

My question is, if you have a loss making biz, do you pay someone to take it over, or just close it?
Coz Mwalimu seems to be paying someone to take it over

I tend to think those are liabilities as Okiya had stated above..... debts, workers pensions etc. But that amount is quite colossal....1.7 billion

 

[Okiya]

My question is, if you have a loss making biz, do you pay someone to take it over, or just close it?
Coz Mwalimu seems to be paying someone to take it over

Ignore the word "pay". It seems the business writer got the English wrong. The point is that Equity is not taking up all liabilities. Mwalimu will be left with liabilities in accounting language are called contingent liabilities.

A simple example, if Keroche was to be acquired today, do you think the buyer will agree to take over the KRA debts which are in court and the outcome not certain?

 

[Aviator]

I tend to think those are liabilities as Okiya had stated above..... debts, workers pensions etc. But that amount is quite colossal....1.7 billion

So, what if the company isn't able to pay the 1.7bn?
What benefit do they get by paying this amount?

Ignore the word "pay". It seems the business writer got the English wrong. The point is that Equity is not taking up all liabilities. Mwalimu will be left with liabilities in accounting language are called contingent liabilities.

A simple example, if Keroche was to be acquired today, do you think the buyer will agree to take over the KRA debts which are in court and the outcome not certain?

Back to my question.
What's the worst case scenario if the bank doesn't get a buyer?
Does Mwalimu sacco lose anything?
Coz from the deal, they are losing 1.7bn outright

 

[Okiya]

Back to my question.
What's the worst case scenario if the bank doesn't get a buyer?
Does Mwalimu sacco lose anything?
Coz from the deal, they are losing 1.7bn outright

They are not losing anything. They have those liabilities in their books.