Letshego Holdings Limited, the BSE quoted consumer lender, said it has withdrawn the cautionary announcement it issued in September when government threatened it would no longer facilitate monthly loan repayments for civil servants.
The move by government sent investors into panic fearing that the company would collapse as the meat of its loan book is in Botswana.
In a latest circular to the Botswana Stock Exchange, Letshego said the decision has been suspended until all stakeholders are consulted.
“On 3 November 2011, the Board of Directors was informed by the central registry that the 1 December 2011 deadline for termination of services has been put on hold until the review process between the relevant stakeholders is complete,” Moses Lekaukau, board Chairman of the company said.
“Normal central registry operations have resumed and the 1 December 2011 deadline is no longer applicable,” he added.
Letshego added that accordingly, shareholders are advised that caution when dealing in the shares of the company is no longer necessary.
The company board issued a cautionary announcement after it became aware on 31 August 2011 of the intention of the government to cease facilitating the deduction of the micro lender’s loan repayments by the Central Registry from the source effective 1 December 2011.
The announcement led to panic in the market with the stock plummeting by 17.6 percent as investors got worried about the future of the company with institutional investorsÔÇöthat included top asset managers dumping the stock.
At the company’s results presentation for the year ended 31 July 2011, Managing Director of Letshego Holdings, Jan Claassen said some investors in the U.S still had the confidence in the company as there was not sell-off.
MD remained bullish about Letshego weathering the storm because if the company was no longer able to collect the normal monthly loan repayments via its agreement with the Central Register, then it could collect loan repayments via electronic debit orders.
“In normal business, there are hiccups at times,” Claassen said. “If something comes, you must change your strategy,” he added.
Letshego’s Botswana led with net advances to customers growing 38 percent from P1.2 billion to P1.72 billion with profit before tax standing at P208.3 million, which was better than P185 .5 million recorded last year.
Government through Central Registries wanted to discontinue a facility in which consumer lenders like Letshego to request the repayments from government in December.
Letshego and other consumer lenders have agreements in place with the respective Central Registers, which will, therefore, be terminated on that date.
Letshego Holdings Limited, a leading provider of unsecured consumer loans listed on the Botswana Stock Exchange, is IFSC accredited and has operations in Botswana, Mozambique, Namibia, Swaziland, Tanzania, Uganda and Zambia.
The stock was pushed up 0.7 percent to 140 thebe on the Monday trade after the news of withdrawing the cautionary.