The MultiChoice Group, a prominent South African pay-TV operator, has disclosed a significant financial write-off of US$21 million linked to cash held at the now-liquidated Heritage Bank.
A write-off occurs when a company or government recognizes that a debt or a previously spent amount will not be recovered.
This information was shared in the company’s financial results for the six months ending September 30, 2024.
In its June FY 2024 annual report, Multichoice reported a deposit of US$20 million with Heritage Bank as of March 31, 2024. However, due to cash withdrawals made prior to the bank’s liquidation on June 3, 2024, the reported balance was revised to US$18 million.
Following the Central Bank of Nigeria’s revocation of Heritage Bank’s banking license on June 3, 2024, and subsequent liquidation, MultiChoice indicated that it had to write off the receivable tied to the cash held in the bank. This write-off contributed to the US$21 million listed as part of the group’s operating losses for the reviewed half-year period.
The company’s report also pointed out that the ongoing depreciation of the Nigerian naira against the US dollar resulted in additional foreign exchange losses on non-quasi equity loans, notably affecting the USD-denominated intergroup loan from MultiChoice Africa Holdings B.V. to MultiChoice Nigeria Limited.
Despite these hurdles, Multichoice repatriated some funds from its Nigerian operations back to its headquarters, although the amount had decreased compared to the prior year. In this period, the group could extract US$65 million from Nigeria, down from US$91 million in the first half of FY24. This led to extraction losses of US$1 million.
At the end of the reporting period, the group held US$11 million in cash in Nigeria, significantly reduced from US$39 million at the close of FY24. This decline was attributed to consistent cash remittances, the impact of exchange rate translations at the weakened naira, and the US$21 million write-off related to cash at Heritage Bank.
Following the Central Bank of Nigeria’s revocation of Heritage Bank’s license, the Nigeria Deposit Insurance Corporation (NDIC) was appointed as the liquidator. The NDIC has commenced paying out insured deposits, capped at US$2 976,74 per depositor.
Originally, Multichoice intended to collaborate with the NDIC to reach a satisfactory resolution regarding its funds held in the defunct bank. However, the amount deposited by Multichoice exceeds the maximum insurance coverage provided by the NDIC.
Recently, the NDIC announced that it is actively working on compensating depositors with amounts above the US$2 976,74 insurance limit through liquidation dividends generated from the sale of Heritage Bank’s assets.