Small-cap financial services group Ecsponent says it will default on about R188m of its redemption obligations in March, as its options for refinancing preference share debt have been exhausted.

The company said on Tuesday it no longer considered the issuance of preference shares as an appropriate form of funding, and was considering disposal of noncore assets to bolster its balance sheet.

It reported it had swung into a loss in its half-year to end-December, having said previously that currency volatility, a weak global economy and subdued consumer sentiment were taking a toll.

Ecsponent raised funding through the issue of preference shares, which are redeemable after five years — meaning the company repurchases them.

The default on redemptions “follows after various funding alternatives which the board had considered for the refinancing of its preference share debt have been exhausted and given the company’s current asset base, which is aimed towards long-term capital growth and not capable of conversion into cash in a short space of time”, the statement read.

During 2019 Ecsponent had increased its stake in Frankfurt-listed fintech business MyBucks SA, saying it wanted to drive a turnaround in the struggling technology group.

Ecsponent said in September it wanted to convert loans it gave to MyBucks into equity, at a subscription price of €1/share in a transaction worth R450m (€27.8m).


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