New shareholder takes over at Blue

| Wednesday August 18, 2010 00:00

Mayibuye had initially planned to start implementing turnaround strategies at Blue by the end of August, but announced on Friday that CEO Johan Meiring had been authosrised to start a raft of strategies to bring the company back to profitability.

The company said this was because latest figures had revealed that Blue would incur another loss in the six months to August, a situation which warranted full attention than the present arrangement where Blue was being run by an interim CEO.  Previous CEO, Dave van Nieberk resigned after his position became untenable when Mayibuye agreed to rescue the company.

Meiring said he would oversee a programme that includes aggressive cost cutting, tightening credit approval processes and revamping debt collection procedures. Mayibuye estimated that it would take two to three months to stabilise the company by reducing the amount of losses it was making, with an estimation that Blue will return to profitability by February 2012.

Meiring indicated that the stabilisation process would start in South Africa as regulatory had been granted.  In other countries, a process of either formally applying to begin to restructure the business or informing the authorities before carrying out a similar exercise has been started.  Blue's woes were blamed on a wrong business model of expanding its loan book too fast without the support of adequate wholesale funding.

In addition an ill-timed acquisition of microlender Credit U in 2008, which failed to provide a further boost to revenue, further weakened Blue's finances. Mayibuye has asked Blue's present board to step down, and a new board supported by strong risk and audit structures would be appointed. (BusinessDay)