UAP renegotiates Sh10 billion loans burden on losses

UAP Insurance building. FILE PHOTO | NMG 

By VICTOR JUMA
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Summary

• UAP was to repay two Old Mutual loans amounting to Sh5.1 billion in March and April of this year but these will now fall due in 2021.

Insurance group UAP Holdings is renegotiating the repayment of Sh10.1 billion worth of loans to several lenders after failing to settle some of the debt on the agreed dates.

The company is in various stages of implementing the debt restructure with the creditors including its South Africa-based parent company Old Mutual and Stanbic Bank.

Details of the refinancing arrangements have been disclosed by the company in its annual report for the year ended December.

UAP was to repay two Old Mutual loans amounting to Sh5.1 billion in March and April of this year but these will now fall due in 2021. “By mutual agreement with the directors of Old Mutual Holdings Limited, the maturity date of the loans has been extended to 2021 as the directors make arrangements to settle the loan,” the insurer said in the report.

Old Mutual is UAP’s controlling shareholder with a stake of 60.5 percent and which was acquired in 2015 at a cost of Sh20 billion from a consortium of investors including businessman Chris Kirubi.

The multinational had planned to acquire an additional six percent equity from UAP’s long-term minority shareholders Joe Wanjui and James Muguiyi but it is not clear whether the transaction was completed.

The insurer says a Sh2.2 billion loan provided by Stanbic Bank falls due in January 2021 but will likely be settled using another debt facility.

The insurer took the loan and used it to redeem its corporate bond in July last year.

UAP says that another $27 million (Sh2.8 billion) owed to South Africa’s Nedbank and which matures in September will also be replaced with another loan.

“Put in place arrangements to refinance the maturing balance of the Nedbank and Stanbic bank loans. These negotiations include negotiations with its bankers and the ultimate parent,” the insurer said.

As part of efforts to appease creditors, Old Mutual’s loans to UAP have been subordinated (will be settled after other lenders have been paid).

UAP reported a net loss of Sh3.3 billion in the year ended December, rising 6.5 times from a Sh517.8 million net loss the year before.

“The loss is attributed to valuation write-downs for the investment properties, which totalled Sh4 billion … for UAP Old Mutual Tower (Kenya), Equatoria Tower (South Sudan) and Nakawa Business Park (Uganda),” the insurer said.