GROWING IMPAIRMENTS
Nonperforming loans heap pressure on state-owned IDC
Nonperforming loans in the Industrial Development Corporation (IDC) have risen to R7.5bn, with a difficult hotel project in Uganda one of the reasons. The state-owned investor recorded its highest level of impairments in five years against underperforming assets. The growth in nonperforming loans was in part because of a grace period given to investments where there was a period of construction or ramp-up in production before cash generation to service loans began. However, the $100m investment in the Ugandan hotel was problematic. The IDC was involved in legal action to recover the investment and it had the “necessary collateral in place to mitigate its losses in this case”, it said in its annual report. The IDC’s impairments grew to R4.9bn during the year from R2.1bn, largely because of the writing down of investments in fertiliser company Foskor, in which it has a 59% stake, and the 74%-held steel business of Scaw, which it bought from Anglo American in 2012. It wrote off R3.1bn ...
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