Companies

Chandaria kin set to repay Sh2.5bn NCBA loan after plant sale

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NCBA branch in Nairobi. FILE PHOTO | NMG

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Summary

  • Grit has signed an agreement to buy Opal’s manufacturing and warehousing facilities in Mlolongo and will lease them back to the firm for an initial 25 years, with an option to extend the tenancy for 10 years.
  • Mr Sachen is part of the larger Chandaria industrialist family that includes businessman Manu Chandaria.
  • The transaction has been structured in a way that will see Mr Sachen pocket some of the money while other amounts will be used to settle the NCBA loan and further expand the manufacturing facilities.

Sachen Chandaria will repay a loan of more than Sh2.5 billion he took from NCBA Bank Kenya #ticker:NCBA after his company Orbit Products Africa Limited (Opal) completes the sale of its factory to Mauritius-based Grit Real Estate Income Group for nearly Sh6 billion.

Grit has signed an agreement to buy Opal’s manufacturing and warehousing facilities in Mlolongo and will lease them back to the firm for an initial 25 years, with an option to extend the tenancy for 10 years.

Mr Sachen is part of the larger Chandaria industrialist family that includes businessman Manu Chandaria.

The transaction has been structured in a way that will see Mr Sachen pocket some of the money while other amounts will be used to settle the NCBA loan and further expand the manufacturing facilities.

The exact amount Opal owes NCBA was not immediately clear but sources familiar with the matter said the loan is in excess of Sh2.5 billion. NCBA CEO John Gachora declined to comment on the matter.

“This innovative sale and leaseback transaction is amongst the largest across the sub-continent, with the strategic partnership with Grit representing a significant long-term undertaking by Orbit and reaffirms our commitment to Kenya and the region,” said Mr Sachen in a statement.

“Proceeds from the transaction will substantially further strengthen our balance sheet, positioning Orbit for expansion and product and category extensions, to better service and support the ambitious growth plans of our pan-regional and multinational customers.”

Opal is the contract manufacturer for global firms such as Reckitt Benckiser, Colgate-Palmolive and Unilever at the 20-acre site.

The company has operated in Kenya for close to 50 years and employs more than 600 people in the region.

“It is further expected that because of the increased manufacturing capacity post the transaction, factory and middle-management headcount will expand by between 20 percent and 25 percent, resulting in approximately 100 jobs being added,” Grit said in a statement.

Grit is funding the investment from loans from the International Finance Corporation (IFC) and private equity firms.

The IFC is providing $25 million (Sh2.7 billion) while Ethos Mezzanine Partners GP Proprietary Limited and BluePeak Private Capital GP will invest $31.5 million (Sh3.5 billion) in a bond to be issued by Grit.