UAP gets more time to settle Sh8bn Old Mutual, Stanbic loan


UAP Insurance Building in Nairobi. FILE PHOTO | NMG

Insurance Group UAP Holdings has restructured Sh8 billion worth of loans from its parent company Old Mutual Holdings and Stanbic Bank, delaying the repayment of the credit facilities by two one to three years.

A Sh2.2 billion loan from Stanbic Bank, which was to mature in January 2021, will now be paid in 2024.

“This refinancing arrangement was concluded after year end in February 2021. The new facility is for a term of three years,” UAP says of the Stanbic loan in its latest annual report.

The insurer took the bank loan on July 17, 2019 and used it to repay its corporate bond that was maturing then. The Stanbic loan attracted an interest rate based on the Central Bank Rate (currently at seven percent) plus a 1.5 percent margin.

A Sh5.8 billion loan from South Africa-based Old Mutual, which has a 66.7 percent stake in the insurer, was also due in January 2021 and will be paid next year.

“By mutual agreement with the directors of Old Mutual Holdings Limited, the maturity date of the loans maturing in January 2021 totalling Sh5.8 billion have been extended to 2022 as the directors make arrangements to settle the loan,” UAP says in the report.

Part of the Old Mutual loans were used to retire a Sh3.3 billion facility from South Africa-based Nedbank last year.

The Old Mutual loans have variable interest rates ranging from 7.6 percent to 11.1 percent based on margins added to various benchmarks including the CBR and 3-month London Inter-bank Offered Rate (Libor).

This is the latest loan restructuring at UAP following the insurer’s renegotiation of credit facilities (including those provided by Old Mutual and Stanbic) totaling Sh10.1 billion in 2019.

UAP is also renegotiating the terms of other loans after breaching them.

“During the year, a breach was recorded for the Norfund and IFC facilities in UAP Properties South Sudan. The balance outstanding on the two facilities as at December 31, 2020 was $3.3 million (Sh357 million) split equally between both lenders,” the insurer said.

“Repayments continue to be made on the loans timeously. To remedy the breach, management is engaging the lenders to renegotiate the covenants.”

UAP’s borrowings rose to Sh13 billion in the year ended December from Sh11.4 billion a year earlier while interest expenses over the period declined to Sh1.1 billion from Sh1.2 billion.

The insurer reported a net loss of Sh1.3 billion in the year ended December, narrowing it from Sh3.4 billion a year earlier.