Ecobank Kenya Limited has appointed a receiver manager to take over certain assets of East African Cables
that has defaulted on a Sh161 million loan from the lender.
A
notice in the latest Kenya Gazette says that the lender appointed
Kereto Marima to take custody of the cables manufacturer’s plant and
machinery effective January 31, 2020.
Ecobank advanced
the cash to the Nairobi Securities Exchange-listed firm through
debentures –an agreement in which the borrower pledges several assets to
the creditor as collateral.
“All matters to do with
the specific assets captured by the debentures dated December 7, 2011,
dated July 30, 2013 and March 11, 2015, collectively known as the
debentures, shall be dealt with by the receiver,” reads part of the
notice.
The notice was signed by the receiver manager
on February 10, 2020. The value of the assets taken over by the receiver
was not immediately clear.
EA Cables, however, says in its latest available annual report that it has pledged all its assets to various banks.
“East
African Cables Limited (Kenya) has entered into facility arrangements
with banks and the borrowings are secured by certain land and buildings
for Sh2 billion … and debentures over all assets of the company for
Sh3.2 billion,” the company says in its 2018 annual report.
This
is the latest enforcement action by EA Cable’s creditors. SBM Bank
(Kenya) Limited also recently sought court orders to liquidate the
debt-laden firm.
EA Cables is part of a group of companies owned by investment firm TransCentury
and which have struggled to pay various creditors including bondholders and banks.
The cable manufacturer’s biggest lenders, the Kenyan and Tanzanian branches of Standard Bank Plc
, last year agreed to take a haircut of Sh1.56 billion and were paid Sh1.6 billion as final settlement.
EA
Cables took new loans from Equity Bank and used the amounts to pay off
StanChart. The company had also disclosed that it was negotiating with
Equity Bank to also settle the remaining claims by SBM (Sh285 million)
and Ecobank Kenya (Sh161 million).
The actions by
Ecobank and SBM suggest that the cables manufacturer has been unable to
restructure the remaining loans. Prior to taking over the loans from its
rivals, Equity Bank had already lent more than Sh2 billion to EA
Cables.
The cables manufacturer had marked land and
buildings in Nairobi and Dar es Salaam for sale in a bid to raise funds
for reducing its debt load.
The company has incurred
annual finance costs of more than Sh500 million in recent years when its
ability to deliver on contracts has been constrained. Its short term
liabilities, for instance, exceeded current assets by Sh3.2 billion in
the year ended December 2018.
It made a net loss of
Sh568.3 million in the review period, narrowing the negative earnings
from Sh662.8 million the year before.
Sales in the corresponding period shrunk to Sh1.6 billion from Sh2.3 billion.
EA
Cables is expected to record a paper profit in financial year ended
December 2019, thanks to partial debt forgiveness by the StanChart
units.
No comments :
Post a Comment