Formerly known as GetBucks Botswana, then once a promising micro-lending junior, FirstCred Limited is suffocating and failing to pay back debts running into millions of pula.
Infact, after issuing a P500 million medium term note programme approved by the Botswana Stock Exchange, it appears FirstCred management have been cashing in on the programme because the funds are alleged to have been moved to its parent company based in Mauritius, and some in South Africa. FirstCred, a company popularly known as GetBucks, is wholly owned by Mauritius-based GetBucks Limited, with MHMK Group as the ultimate holding company, also based in the Islands of Mauritius.
In February 2017, GetBucks Limited launched and listed a bond on the Botswana Stock Exchange (BSE). At that time, the bond attracted 13 bondholders who had subscribed for it to the tune of a cumulative P116.8 million. The bond was issued under a P500 million medium term note programme.
HOW FIRST CRED VIOLATED PURPOSES OF THE BOND
According to available information, the purpose of the funds raised under the P500 million medium term note programme was to re-finance the existing financing facilities and thereby reduce the cost of funding. Further, such funds were initially intended to reduce foreign exchange exposure. This is because Pula-denominated facilities backed by USD inter-company loans held as offshore deposits with Botswana banks have had a significant negative impact on the profitability of GetBucks Botswana due to the depreciation of the Pula.
So GetBucks, through raising such cash, sought to reduce currency exposure by accessing local funding. Through raising such cash, GetBucks also sought to expand its services and product offering. The idea was to expand the normal ongoing operations of GetBucks, which would primarily be used to expand the loan book. Infact, The Business Weekly & Review understands that GetBucks was looking at introducing products like Educational and SME loans, as well as offer longer term facilities, with a maximum of up to 60 months.
The now down and out micro-lender also intended to re-finance existing debt facilities, including shareholder loans, and push further for its growth. As it turns out, funds received from the bond were never utilised for the purpose just outlined but were instead moved to Mauritius, at least the bulk of it.
THE MONEY TRAIL
An investigation by The Business Weekly & Review has unearthed information that most of the funds received from the bond were squandered between 24 February 2017 and 10 April 2018. According to information sourced, large amounts of money were moved from the FirstCred bank accounts after the said funds were received. As part of the funds raised (P116.8 million), it appears that P21 million was deposited into the FirstCred account on 24 February 2017 by Lions Head, which is one of the bondholders.
However, on the 27 February 2017, basically two days after receipt of the P21 million, a total of P20 million was moved from the FirstCred Botswana account to GetBucks Mauritius. The payment of P20 million to GetBucks Mauritius was funded largely by the P21 million deposit of 24 February 2017. The funds were said to have been characterized as inter-company loans, according to information sourced, although there is no evidence in terms of any inter-company loan general ledger to confirm that indeed there was such an inter-company loan. The ‘payment’ seems to be in contravention with the purpose of the funds raised from the bond.
Further, and according to the bond listing schedule, FirstCred received P11 million from DTM Capital on 26 September 2017. It emerges that a payment of P19.8 million was made to a company called RCB CEES. That payment, according to information sourced by The Business Weekly & Review, was funded largely by the P11 million deposit of the 26 September 2017. With regards to how the funds were accounted for by FirstCred, it appears there were no disclosures of transaction history relating to RCB CEES in the FirstCred consolidated and separate financial statements for the 2018 reporting period. However, in the MyBucks financial statements for the same period, RCB CEES was shown as a related party to whom MyBucks owed a loan. Further, the same financial statements are said to have not indicated RCB CEES as a shareholder or subsidiary of MyBucks. It is therefore believed that the payment to RCB CEES violated terms of the bond.
According to the bond listing schedule, P3.4 million was received from DTM Capital on 4 October 2017 and a payment of P3 million was made on 6 October 2017 to VSS South Africa. VSS Financial Services (Pty) Ltd (South Africa) is a fellow subsidiary of GetBucks. The P3 million moved to VSS South Africa was funded largely by the P3.4 million from DTM Capital. The payment was apparently referenced as ‘management fees’ covering IT services, day-to-day management and access to the loan system used by GetBucks.
A further P5 million was received by FirstCred from Hollard on 22 March 2018 and a payment of P4 million was made to SureChoice on 28 March 2018. GetBucks and SureChoice were related in that GetBucks had an agreement of administrative services with SureChoice effective 1st December 2016 by which the former would provide SureChoice operational, financial reporting and information technology support. Further, SureChoice was owned by an entity that was a shareholder of GetBucks’ ultimate shareholder. The funds, according to sourced information, were said to have been settling a loan account despite there being no available general ledger to indicate that indeed such a loan existed. SureChoice is a related party in that it is a subsidiary of Ecsponent Limited South Africa, a shareholder in FirstCred’s ultimate shareholder, MyBucks.
In accordance with the bond listing schedule, FirstCred received P25 million from ACLB on 11 April 2018. After that deposit, P20.3 million was made on 20 April to GetBucks Mauritius. This payment was listed on the bondlisting schedule as a repayment of a loan received from GetBucks Mauritius between February and March 2017. The payment was funded largely by the P25 million received from ACLB. Whilst FirstCred had a bond in existence, it further sought a P25 million loan from Capital Bank at 17 percent annual interest, which was higher than the bond’s 15 percent fixed annual interest rate.
For the period 1st February 2017 to 31 March 2017, four payments of P5 million each totalling P20 million were paid into FirstCred Stanbic Bank account, with the transaction description stated as Capital Bank NONREF. A further P4 million with the same description was received on 16 March 2017, bringing total funds received from Capital Bank to P24 million. It appears the funds were sourced specifically by FirstCred to pay GetBucks Mauritius. After receipt of such a loan, a payment of P25.8 million was paid to GetBucks Mauritius.
On the 4 January 2018, P50 million (USD4.9 million) was received from Ecsponent. From that deposit, USD400 000 was paid to GetBucks Head Office, USD3 million to TLG Credit Opportunities, USD800 000 to GetBucks Mauritius while USD210 000 was paid to Ecsponent. A further USD249 895 was paid to VSS South Africa while USD250 000 was paid to GetBucks Limited Mauritius.