East African Cables #ticker:CABL hopes to reach an out-of-court deal with SBM Kenya which is seeking to liquidate the loss-making manufacturer for defaulting on servicing a Sh285 million unsecured loan.
Chief executive Paul Muigai said he was confident the listed electrical and communications cables and conductors maker will reach an agreement with the lender on repayment terms of the unsecured loan it took in 2014.
“What has happened is unfortunate; we are in constant discussion with the bank. It is unfortunate to seek to liquidate such a company for such an amount,” Mr Muigai said in an interview.
“We are discussing with them on how to restructure it (loan) and the other option is to get somebody else to buy off the loan. I am sure we will find a solution.”
SBM last December filed the insolvency petition, which triggered Ecobank to demand Sh190.5 million from EA Cables. Ecobank then appointed Mr Kereto Marima as the receiver manager, a decision the listed manufacturer has challenged in court. A prayer by SBM to consolidate all other cases filed against the loss-making firm was thrown out last week by Justice David Majanja.
The judge ruled that SBM (formerly Chase Bank) has no interest in EA Cables property secured in favour of Ecobank since its facility was not collateralised. SBM was part of lenders which funded EA Cable’s Sh2 billion expansion strategy between 2014 and 2016 which saw it expand production by two-folds to 750 tonnes a month, modernise one of its two factories in Kenya and invest in new technology.
The cable manufacturer’s biggest lenders, the Kenyan and Tanzanian branches of Standard Chartered Bank Plc, last year agreed to take a haircut of Sh1.56 billion and were paid Sh1.6 billion as final settlement.