SSNIT defends Fortiz acquisition of Merchant

SSNIT has defended the acquisition of Merchant Bank by Fortiz Equity Capital.

It says the deal was the best among the three bidders.

In a statement to set the record straight, the national trust said the purchasing arrangement made by Fortiz was transparent as indicated by the transactional advisors, KPMG.

SSNIT said it informed FirstRand Bank of South Africa when it re-opened the bid for prospective new owners of Merchant Bank after terminating the earlier deal in June.

Indeed, the date was extended to enable the second largest bank in Africa to re-bid but did not do so. The other two bidders were Sabre Advisors of the United Kingdom and UT Bank.

In comparing the bid between First Rand and Fortiz, SSNIT said Fortiz made good plans to recover at least 30 percent of the bank’s bad debt while expressing a willingness to recover 70 percent going forward with 30 percent and above going to SSNIT.

However, First Rand wanted to have nothing to do with the bad loan book. The trust said it abrogated the First Rand deal because it was not favorable.

For instance, FirstRand asked SSNIT and SIC, the existing shareholders, to buy Merchant Bank’s bad debts for 173.6 million Ghana Cedis.

It also asked them to raise the Capital Adequacy Ratio of the bank to 10 percent by injecting 42.6 million Ghana Cedis. On the activities of the transactional adviser, SSNIT said on September 9 this year, it received three copies of KPMG’s final report.

The report was then considered by the board of the trust on September 19 agreeing to offload its shares in Merchant to Fortiz subject to Bank of Ghana’s approval.

It then wrote to the Central Bank on September 20 informing it of the board’s decision.

The Central Bank then wrote to Fortiz requesting for further information needed for review before approval.

On October 30, the trust said the Central Bank granted it approval for Fortiz to inject an initial fresh capital of 90 million Ghana cedis in Merchant subject to specified conditions and recommendations.

This is expected to change the ownership structure with Fortiz acquiring 90 percent shares while SSNIT and SIC will own 9 and 1 percent shares respectively.

So far, an escrow account has been opened at the Bank of Ghana and Fortz has indicated it has given instructions for funds amounting to 90 million Ghana Cedis to be moved into the account over the next few days.

Furthermore, the Financial Intelligence Center and the Securities and Exchange Commission have been informed to carry out due diligence and appropriateness of the role of Fortiz in the transaction.

Fortiz has already indicated to turnaround Merchant Bank within the next five years.