January 2024 – Update on the MiPlan IP Enhanced Income Retention Fund
Bridge Taxi Finance update
As you may be aware, some investors hold interests in the main fund and in the retention fund of the Mi-Plan Enhanced Income Fund. Together these are the consolidated fund. The retention fund houses instruments that are exposed to Bridge Taxi Finance. While the main fund achieved top quartile performance over periods from 3 years to 10 years, understandably there has been on-going investor concern about the likely value of exposure in the retention fund.
Since the formation of the retention fund in early 2024, Vunani Fund Managers has been intensively engaged in trying to resolve the issues at Bridge Taxi Finance that impact the instruments in the retention fund. As part of this effort, Vunani Fund Managers along with other Noteholders, unanimously approved the delisting and restructuring of the notes exposed to Bridge Taxi Finance in December 2024. The legal agreements to restructure the instruments will proceed during the course of the first quarter of 2025.
The delisting is aimed at improving the transparency of information shared between the new Servicer — being Mobalyz — and Noteholders as the ultimate capital providers. Previously this information had been subject to assessment for price sensitivity under JSE debt listing rules. Furthermore, swifter information exchange will enable Noteholders to have greater impact in terms of steering Mobalyz to execute certain interventions to increase collection levels.
All these initiatives are on-going and we believe that they will bear fruit. However, it is important to point out to investors that at the end of December 2024, leadership of the Management Company along with the Trustees of the collective investment scheme made a decision to fully write down a subordinated note. Vunani Fund Managers categorically expressed its disagreement with this stance.
Vunani Fund Managers remains resolute in our unwavering commitment to recover funds owed for all instruments and to realise maximum value for our clients within the shortest amount of time.
Rowan Williams-Short
Vunani Fund Managers
December 2024 – Manager Commentary & update on the MiPlan IP Enhanced Income Retention Fund
“During the final quarter of 2024, Noteholders met to discuss delisting the various notes exposed to Bridge Taxi Finance. A unanimous vote was taken to delist, which is awaiting ratification by the JSE. The delisting will create a conducive environment for information flow which will be helpful during the restructuring process.
We anticipate that new structures will allow all Noteholders stronger decision-making rights which will in turn aid initiatives to improve cash collections and return cash to investors. At the end of the quarter, leadership of the Management Company and the Trustees decided to fully impair the subordinated note RED707.”
December 2024 – Red 707 valuation update
After extensive consultation between the Trustees, BCI / IP Management Company, it was resolved by them to write down the valuation of the subordinated debt instrument RED707 to a nil carrying value. To be clear: it is only the RED707 that is being revalued, not every instrument in the retention fund.
While no trading is possible in the MiPlan IP Enhanced Income Retention Fund units, the carrying value is important for other unit trust funds and fund of funds to continue to ensure their assets are fairly valued as required by the Regulator.
This step has been taken to ensure all investors are treated fairly, as far as possible, under the circumstances.
Regards
Anton Turpin
November 2024 – Manager Commentary
“We remain intensively engaged on the Bridge Taxi Finance issue. The change of service provider from Mokoro to Mobalyz (entailing the physical movement of vehicles and the hand over of the collections book) has been completed. Having removed what had become a somewhat dysfunctional operating company, the next step is to review our agreements with the debt arranger. This is currently in progress.”
October 2024 – Manager Commentary
“The change of service provider from Mokoro to Mobalyz (entailing the physical movement of vehicles and the handover of the collections book) has been completed. The task befalling Mobalyz is principally to improve the collections rate. Various initiatives are in place.”
September 2024 – Manager Commentary
“We and other investors have changed service providers from BTF to Mobalyz. This entailed moving ISAs and physical, repossessed taxis, a process that took a few weeks. Mobalyz also collects monthly payments on behalf of SA Taxi and those collection rates are considerably higher than what BTF had been achieving. Some interest was received in September, so the fund returned 0.5%.”
August 2024 – Manager Commentary
“We remain intensively engaged on the Bridge Taxi Finance issue. The replacement of the servicing agent (from Mokoro to Mobalyz) has gone smoothly and early results on collections and sales appear promising.
The business rescue practitioner at Mokoro has come to the view that the business cannot be rescued. He has therefore started preparing an application to liquidate Mokoro. The liquidation hearing is likely to take place during the course of this month, depending on when the court is ready to hear the application. In the meantime, the bulk of the assets that were at Mokoro are now at Mobalyz and efforts to collect on the outstanding debts continue there.”
Update: 17 September 2024
“During September 2024, further progress was made on the fund’s investments associated with Bridge Taxi Finance.
First, noteholders voted unanimously not to extend the maturity of the Martius note with JSE code MAR02B, scheduled to mature on 17th September 2024. Legally, this places the notes in default. The default crystallizes investors’ claims against both the funding SPV and the previous service provider, Mokoro.
Second, we received partial coupon payments on both MAR02B and MAR03B on 17th September. While these are well below the originally promised payments, they are the first interest payments since January 2024.
Third, the default allows us, along with other noteholders, to begin restructuring the Martius and Redink notes.”
July 2024 – Manager Commentary
“We remain intensively engaged on the Bridge Taxi Finance issue. We have changed the servicing agent, responsible for collections and repossessions. Negotiating with other lenders, expert intermediaries and the underlying companies can be frustratingly slow (the Land Bank default has now endured over 4 years) but progress is being made. We have begun exploring a new initiative. As the relevant instruments are listed on the JSE we cannot divulge sensitive information at this stage.”
June 2024 – Manager Commentary
“We remain intensively engaged on the Bridge Taxi Finance issue. We have decided to change the servicing agent, responsible for collections and repossessions. Negotiating with other lenders, expert intermediaries and the underlying companies can be frustratingly slow (the Land Bank default has now endured over 4 years) but progress is being made.”
May 2024 – Manager Commentary
“We remain intensively engaged on the Bridge Taxi Finance issue. Not all lenders agreed to work together on this, but most have given assent. Various measures were put in place towards improving collections, cutting costs at the operating company’s level, testing the efficacy of an outsourced collections agency, increasing throughput at the refurbishment plant and releasing new vehicles currently held at a secure facility in Durban.
Nevertheless, the operating company remains under pressure from a liquidity perspective. A Noteholders’ meeting in May, failed to pass resolutions that would release general management fees to the operating company from funds held in the ring-fenced special purpose vehicles under the control of the Noteholders. However, temporary funding for critical expenses was allowed. We have continued to engage with other Noteholders to further isolate the interests of the Noteholders from the problems at the operating company, which have included engaging legal, verification and valuation advisors. The aim remains to maximise recoveries for investors.”
April 2024 – Manager Commentary
“We remain intensively engaged on the Bridge Taxi Finance issue. Not all lenders agreed to work together on this, but most have given assent. Various measures are in place towards improving collections, cutting costs at the operating company’s level, testing the efficacy of an outsourced collections agency, increasing throughput at the refurbishment plant and releasing new vehicles currently held at a secure facility in Durban.”
March 2024 – Manager Commentary
“This retention fund principally consists of assets with exposure to two special purpose vehicles linked to Bridge Taxi Finance No. 8 (RF) (Pty) Ltd (“BTF 8”) and Bridge Taxi Finance No. 6 (RF) (Pty) Ltd (“BTF 6”). Debt notes have been issued under the Redink programme for BTF 6 and under the Martius programme for BTF 8. These notes referencing BTF 6 and BTF8 have performed as expected since the initial investments in June 2018, paying all coupons in full and on time each quarter.
However, in January 2024, the founder, CEO and largest shareholder of Bridge Taxi Finance and its operating company, Mokoro Holdings, passed away suddenly. Subsequently, Vunani Fund Managers discovered that Mokoro had overdue payments to suppliers and that there had been an underpayment of interest due in a structure outside of either Martius or Redink. These failures caused an “Event of Default”. Upon further investigation, it became apparent cash collections had deteriorated significantly and consequently the likelihood of missed coupon payments had increased. In this light, Vunani Fund Managers took the difficult decision to create a retention fund (also commonly known as a “side-pocket”), to house the affected instruments and prudently assume impairments on the carrying value of the affected instruments based on seniority and priority of claims. Management fees on the side-pocket have been suspended.
Vunani Fund Managers has appointed White and Case, a legal firm with extensive expertise in debt finance and structured finance, to advise on the legal rights and remedies available to the lenders in BTF 6 and Martius programme for BTF 8. Other service providers are being engaged to ensure that there is clarity on the valuation and security of underlying assets. Vunani Fund Managers remains in continuous engagement with the operational management of Bridge Taxi Finance, to ensure funds invested in the affected instruments are protected and recovered to the greatest extent possible. Vunani Fund Managers undertakes to inform clients of any significant developments in relation to this matter. That notwithstanding, a firm timeline for the resolution of this matter is uncertain but will be shared as and when there is further clarity.”