Pan-African housing financier Shelter Afrique has written to the Nairobi Securities Exchange seeking permission to restructure its debt to avoid a possible default.
Shelter Afrique could default on its $50 million corporate bond listed on the NSE if it fails to get the bond holders’ consent to reschedule payments.
It wrote to the NSE seeking permission from the holders of the bond it issued five years ago as part of a planned restructuring of a $130 million debt it owes 10 development finance institutions (DFIs).
Failure to get the approvals at a planned extraordinary meeting, the lender said, would plunge it in deeper financial stress, "effectively risking a default on repayments to noteholders."
Shelter Afrique said that the regulatory notice that both repayments to the bondholders and the debt owed to the DFIs would be at risk default should the bond holders reject its debt restructuring proposal at the upcoming extra-ordinary meeting scheduled for May 10.
The firm listed $50 million five-year medium-term unsecured note on the NSE in 2013 with a September 28, 2018 maturity date. One tranche of $42.3 million has a coupon rate of 12.75 per cent while the other $7.7 million is priced at 11 per cent.
Shelter Afrique wants the holders of the $6.9 million 12.75 per cent fixed note, the $1.25 million 182-day bills and the 1.5 per cent per annum floating rate notes due in 2018 to enter a "no objection" to its delaying payments.
They will also need to waive the right to declare default.
Restructure "The purpose of this solicitation is to seek a ‘no-objection’ from noteholders to enable Shelter Afrique to enter into a Standstill Agreement and to request Noteholders to waive the right to declare an event of default. During the standstill period, Shelter Afrique proposes to restructure its loans and advances.Upon completion of the restructure, Shelter Afrique is expected to have more cash flow available to manage its operations that will allow the institution to resume its lending activities. Noteholders’ consents to the proposals are conditions precedent to the finalisation of the Standstill Agreement," it said in a notice.Mid-week, the firm’s managing director Femi […]