Atlas Mara had published a press release claiming that its discussions with its creditors regarding unpaid bonds that fell due in December 2020 were going well. However, in the press release, it claimed TLG Capital two other creditors “did not agree to enter into the Standstill or similar arrangement with the Company, notwithstanding the benefits of the Standstill to the Company’s creditors as a whole.”
Atlas Mara believes “TLG’s actions as both hostile and detrimental to the interests of the Company and its creditors, including TLG itself.”
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However, according to TLG Capital, its $10.8 million loan due from TLG has been due since January 19 2021, and yet to be repaid. The private equity firm believes Atlas Mara’s inability pay its bondholders is because it is insolvent and thus should be liquidated.
” TLG welcomes the news that over 87.7 percent of bilateral creditors agreed to enter the Standstill or similar agreements, along with over 60 per cent of the principal holders of the group’s convertible bonds due 31 December 2020. If this is the case, and if the statements published by Atlas Mara in their press releases of 29 December 2020 and 8 October 2020 are true, then TLG fails to understand why Atlas Mara cannot pay “a small holdout creditor” the debt of USD 10.8 million that is due and payable. The reason of course, is that Atlas Mara is insolvent, which fact fully justifies TLG’s liquidation application.”
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TLG Capital Rebuffs
TLG Capital also denied claims by Atlas Mara that it had engaged the former to join other creditors in the Standstill Agreement (a temporary arrangement with other creditors to avoid calling their bonds or liquidating the company).
“Atlas Mara has stated, “[Since executing the Standstill with a significant majority of its creditors, the Company has continued to engage with TLG in an effort to obtain its support and agreement to the terms of the Standstill or to find another consensual solution.” This is incorrect: Atlas Mara has generally refused to engage with TLG for months, failing to reply to no less than six separate legal notices. Along with a wholly-owned subsidiary, Atlas Mara has also failed to comply with its legal obligations under binding and enforceable agreements, despite being requested to do so on numerous occasions.” TLG Capital
Atlas Mara had reached an agreement with some of its bondholders to stay action on loans that had fallen due, however, according to it some “hold out creditors” like TLG did not accept the terms.
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Conflict of interest with bondholders?
A spokesperson for TLG informed Nairametrics that Atlas Mara was not being sincere about their handling of the loans citing the relationship between Atlas Mara and Fairfax (who indirectly owns Atlas Mara) as a potential conflict of interest in whatever negotiations were being held with creditors.
“As a creditor of Atlas Mara, TLG finds it curious that in December 2020 Fairfax Financial purchased the entire 42% stake in Atlas Mara held by Helios Fairfax for USD 40m, when Atlas Mara was in the midst of negotiating a standstill arrangement with its creditors and acquiring new financing. Mr Wilkerson will of course have had full visibility of these facts as he hopped between his various fiduciary perches.”
Apparently Fairfax Financial Holdings Limited, Helios Fairfax Partners Corporation and UBS O’Connor constitute a significant portion of Atlas Mara’s creditors.
According to TLG Capital “these creditor arrangements, and other interlocking relationships with the potential for conflicts of interest at the Atlas Mara board and shareholder level, are gravely concerning to TLG, and TLG likewise believes they should concern Atlas Mara’s other third party creditors and stakeholders.”
“For example, TLG notes that Mr Prem Watsa, the founder and Chairman of Fairfax Financial, is also the Chairman of Helios Fairfax. Moreover, TLG notes that Atlas Mara’s Executive Director and Chairman, Michael Wilkerson, is also the Executive Vice Chairman of Helios Fairfax. Thus the most senior leader of Atlas Mara is a senior executive of one of Atlas Mara’s largest creditors. TLG cannot understand how these arrangements benefit Atlas Mara’s third party creditors or other stakeholders, or how Mr Wilkerson can purport to discharge properly his fiduciary obligations to both Helios Fairfax and Atlas Mara.”
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Why this matters
Atlas Mara holds significant stakes in several banking assets in Africa, including Nigeria’s Union Bank.
- Nairametrics understands it has been tryin to dispose of the Nigeria assets but yet to find any concrete bidder.
- It recently denied it was in talks with any bank to sell its stake in Union Bank.
- However, as it continues to find a way to repay its bondholder, Nairametrics strongly believes it will have to sell its stake in Union Bank to generate cashflow.
- Union Bank has a market capitalization of N152 billion ($370 million). Union Bank has Atlas Mara and Union Global Partners as two of its largest shareholders with 25.03% and 65.3% respectively (as of December 2019).