The proposed restructuring of Banro entails its effective emigration to the Caymans

Banro is a CBCA holding company with two mines in the Democratic Republic of Congo held though indirect DRC subsidiaries. It, along with its direct and indirect Barbados subsidiaries, filed for protection under the CCAA on December 22, 2017 and was then delisted from the TSX and NYSE American. The secured debt (of U.S.$233M) to be compromised is owed at the level of a Barbados subsidiary held directly by Banro (BGB). This will permit Banro to effectively emigrate to the Cayman Islands as part of the proposed Plan of Compromise and Reorganization.

In particular, Banro’s shares of BGB will be cancelled, BGB will issue shares to a newly-formed Caymans company (Newco) for nominal consideration, and the secured creditors will receive shares of Newco in satisfaction of their secured claims against BGB – except that 25% of their claims will instead be treated as unsecured claims. The unsecured creditors will receive nothing other than sharing pro rata in a nominal sum ($10,000), and the Banro shareholders will receive nothing at all.

Not all secured creditors are equal. The DIP lenders will receive 74% of the equity of Newco and all the voting rights, and the other secured creditors will receive 26% of that equity in the form of non-voting shares, subject to dilution by warrants.

The U.S. tax characterization of the reorganization is stated to be unclear.

Neal Armstrong. Summary of Banro Circular under Public Transactions – Other - Recapitalizations – Debt into common equity.