Site icon MONEYINAFRICA

East Africa Cables gets more time to repay Sh498m loans

East Africa Cables gets more time to repay Sh498m loans

East African Cables has restructured a total of Sh498 million worth of loans from SBM Bank Kenya and Ecobank Kenya. FILE PHOTO | NMG East African Cables # has restructured a total of Sh498 million worth of loans from SBM Bank Kenya and Ecobank Kenya, sparing the manufacturer liquidation and asset seizure.

The Nairobi Securities Exchange-listed firm had failed to settle the loans when they fell due, prompting SBM to seek a liquidation of the company while Ecobank sought to protect its interest by hiving off some of the cable manufacturer’s assets.

The parties subsequently reached an agreement to convert the overdue credit facilities into long-term loans at an interest rate of 13 percent, according to disclosures in the cable manufacturer’s latest annual report.

“After year end, the company signed a facility agreement with SBM Bank Kenya Limited to restructure the outstanding balance (Sh310 million) to a tenor of ten (10) years effective April 2020,” the company says in the report.

“A similar loan facility was signed with Ecobank Kenya Limited in June 2020 resulting to restructure of the outstanding debt balance (Sh188 million) to a tenor of six (6) years with effect from July 2020.”

The debt restructure has given the company a reprieve from the pressure to settle the loans immediately.

A default or breach of credit terms usually results in the loans being reclassified as payable within 12 months to protect the interest of lenders who can start taking legal actions to recover their capital.

The loans from the two banks have grown by Sh52 million from Sh446 million in 2018, reflecting the impact of unpaid interest.

Ecobank’s loan previously stood at Sh161 million while that of SBM was Sh285 million. Equity Bank Kenya was to buy out the SBM and Ecobank debt but the talks collapsed.

The debt recovery measures that Ecobank and SBM had instituted had posed a serious threat to the company’s survival.

The cable manufacturer made a net profit of Sh630.9 million in the year ended December 2019, reversing a net loss of Sh568.3 million a year earlier.The profit was largely the product of the write-off of a Sh1.5 billion loan from the Kenya and Tanzania branches of Standard Chartered Bank which the company treated as a gain.The StanChart units, which were owed a total of Sh3.1 billion, opted to walk away with Sh1.6 billion. Equity Bank provided the funds used to pay off StanChart.EA Cables is part of a group of […]

Stay in the Know!

Sign up for the latest news and information on African Companies and Economy.

By signing up, you agree to receive MoneyInAfrica offers, promotions and other commercial messages. You may unsubscribe at any time.
Exit mobile version