Creditors to determine Deacons fate at January 22 meeting

Creditors of fashion retailer Deacons East Africa are set to meet on January 22 to consider and vote for or against options to revive the Nairobi Securities Exchange-listed firm which is under the administration of PKF Consulting.

The meeting has been called by the administrators who will issue their proposals to the creditors ahead of the meeting.

The Insolvency Act 2015 empowers administrators to take various measures to rescue a company, with liquidation being the last resort.

If a distressed company is sold or part of its assets liquidated, administrators will first distribute the proceeds to secured or preferential creditors.

“Notice is hereby given of the first meeting of creditors requested by the joint administrators of Deacons East Africa (Under Administration). The meeting will be held on Tuesday, the 22nd day of January, 2019 at 10:00 Hrs,” reads part of the notice.

Deacons had loans of Sh351.6 million maturing last year when it continued to register lower sales and larger losses attributable to various factors including loss of franchises.

The fashion retailer’s creditors include NIC Bank and UBA Kenya Bank Limited which it owed Sh524.8 million and Sh98.3 million respectively as of December 2017.

Years of losses had reduced Deacons’ book value to Sh101.4 million as of June 2018, nearly wiping out shareholders whose total paper wealth was valued at Sh1.8 billion when the company listed on the NSE in August 2016 at a price of Sh15 per share.

Deacons had lost 97 per cent of its market capitalisation by November 19 when it was suspended from trading on the Nairobi bourse where its stock price had declined to Sh0.45.

One of the biggest losers in the company’s collapse is private equity firm Aureos which had a 5.53 per cent stake. Centum Investment in 2017 moved to buy the Aureos stake but later backed out of the deal without giving reasons.