Conassif Rejects Low Offer for Healthy Loan Portfolio of Coopeservidores
The National Council for Supervision of the Financial System of Costa Rica cites inadequate pricing and recovery terms as reasons for rejecting the bid.
The National Council for Supervision of the Financial System (Conassif) in Costa Rica has officially rejected an offer from MICRÉDITO COSTA RICA to purchase a portion of the healthy loan portfolio of the financial cooperative Coopeservidores.
The decision, announced on January 31, 2024, highlighted five key reasons for the dismissal of the proposal.
The Conassif report indicated that the offer underestimated the value of healthy loan assets by pricing them as if they were significantly deteriorated.
Specifically, the offered price was deemed excessively low, as it represented only 25% of the actual valuation of the credit assets.
The proposed payment model was contingent upon recovery from the loans rather than an immediate cash payment, which was a requirement stated in the tender.
The report further noted that the loan portfolio in question includes real guarantees that enhance the prospects for recovery, which were not adequately reflected in the proposal from MICRÉDITO COSTA RICA.
Additionally, the company suggested managing the entire loan portfolio of Coopeservidores for a high commission, which was also against the terms specified in the auction.
According to MICRÉDITO COSTA RICA's website, the company has been operating since July 1, 2004, and has expanded its services to Nicaragua and Honduras.
The firm aims to reach underserved communities in both urban and rural areas.
In 2019, it registered as a financial group in Panama under the name MiCrédito Holding Corp, with funding sources from Canada, the United States, and Germany.
In detail, the offer for the healthy credit portion was valued at ₣1.315 billion (approximately $10.1 million), whereas the actual value of these assets was estimated at ₣5.260 billion (about $10.1 million at an exchange rate of ₣521.66).
The loan portfolio included 1,026 operations under $100,000, amounting to $9.66 million, while only three credits exceeded the $100,000 threshold, totaling $420,999.
The approved report indicated that these loans have demonstrated an acceptable payment level, with support from the Resolution Administration, adding that a portion of the loans carried real guarantees.
The net value of these assets, after accounting for accumulated interest and estimates, was calculated to be approximately 80.43%, reinforcing that the bid was insufficient in relation to their actual worth.
Furthermore, the Council underscored that the proposal did not represent a straightforward purchase of the assets but instead proposed payment only upon actual recovery of the loans, violating the bid conditions that mandated cash offers.
The proposal also included a request to manage Coopeservidores' entire loan portfolio, which encompassed collection efforts, continuous monitoring, risk assessment, and recovery processes, with a commission ranging from 20% to 40% based on the age of the loans.
Francisco Ruiz, an investment leader at Coopeservidores, expressed disappointment regarding the failure of the asset sale to proceed as initially anticipated.
He remarked on the inappropriate pricing tactics in light of the investors' circumstances and emphasized the importance of not undervaluing the remaining quality assets of Coopeservidores.
This rejection follows four previous unsuccessful attempts to allocate ownership of the remaining assets of Coopeservidores, which was declared unviable by Conassif in June 2024 following an intervention process.
All past offers have significantly undervalued the actual worth of the assets involved.
The decision, announced on January 31, 2024, highlighted five key reasons for the dismissal of the proposal.
The Conassif report indicated that the offer underestimated the value of healthy loan assets by pricing them as if they were significantly deteriorated.
Specifically, the offered price was deemed excessively low, as it represented only 25% of the actual valuation of the credit assets.
The proposed payment model was contingent upon recovery from the loans rather than an immediate cash payment, which was a requirement stated in the tender.
The report further noted that the loan portfolio in question includes real guarantees that enhance the prospects for recovery, which were not adequately reflected in the proposal from MICRÉDITO COSTA RICA.
Additionally, the company suggested managing the entire loan portfolio of Coopeservidores for a high commission, which was also against the terms specified in the auction.
According to MICRÉDITO COSTA RICA's website, the company has been operating since July 1, 2004, and has expanded its services to Nicaragua and Honduras.
The firm aims to reach underserved communities in both urban and rural areas.
In 2019, it registered as a financial group in Panama under the name MiCrédito Holding Corp, with funding sources from Canada, the United States, and Germany.
In detail, the offer for the healthy credit portion was valued at ₣1.315 billion (approximately $10.1 million), whereas the actual value of these assets was estimated at ₣5.260 billion (about $10.1 million at an exchange rate of ₣521.66).
The loan portfolio included 1,026 operations under $100,000, amounting to $9.66 million, while only three credits exceeded the $100,000 threshold, totaling $420,999.
The approved report indicated that these loans have demonstrated an acceptable payment level, with support from the Resolution Administration, adding that a portion of the loans carried real guarantees.
The net value of these assets, after accounting for accumulated interest and estimates, was calculated to be approximately 80.43%, reinforcing that the bid was insufficient in relation to their actual worth.
Furthermore, the Council underscored that the proposal did not represent a straightforward purchase of the assets but instead proposed payment only upon actual recovery of the loans, violating the bid conditions that mandated cash offers.
The proposal also included a request to manage Coopeservidores' entire loan portfolio, which encompassed collection efforts, continuous monitoring, risk assessment, and recovery processes, with a commission ranging from 20% to 40% based on the age of the loans.
Francisco Ruiz, an investment leader at Coopeservidores, expressed disappointment regarding the failure of the asset sale to proceed as initially anticipated.
He remarked on the inappropriate pricing tactics in light of the investors' circumstances and emphasized the importance of not undervaluing the remaining quality assets of Coopeservidores.
This rejection follows four previous unsuccessful attempts to allocate ownership of the remaining assets of Coopeservidores, which was declared unviable by Conassif in June 2024 following an intervention process.
All past offers have significantly undervalued the actual worth of the assets involved.