East African Cables #ticker:CABL has reached a loan restructure agreement with SBM Bank Kenya, a move that has seen the lender retreat from its move to liquidate the Nairobi Securities Exchange-listed firm over a Sh285 million debt.
The cables manufacturer says the maturity date of the loan has been postponed and the collateral changed, without giving further details.
“East African Cables Plc is pleased to announce that the company has reached a debt settlement and restructure agreement with SBM Bank Kenya Limited resulting in withdrawal of the liquidation petition against the company,” EA Cables said in a statement.
“The agreement involves a restructure of the outstanding facilities by the bank under a new long-term facility and security arrangement.”
SBM is among the banks that had taken measures to recover their loans on which the firm had defaulted due to a mix of losses and sales decline in the past five years.
Ecobank Kenya in February appointed a receiver manager to take over certain assets of the cables manufacturer, which had stopped servicing a Sh161 million loan from the lender.
Ecobank advanced the cash to the company through debentures — an agreement in which the borrower pledges several assets to the creditor as collateral.
The value of the assets taken over by the receiver was not immediately clear. EA Cables is part of a group of companies owned by investment firm TransCentury #ticker:TCL and which have struggled to pay various creditors including bondholders and banks.
The cable manufacturer’s biggest lenders, the Kenyan and Tanzanian branches of Standard Bank Plc, last year agreed to take a haircut of Sh1.56 billion and were paid Sh1.6 billion as final settlement.
EA Cables took new loans from Equity Bank #ticker:EQTY and used the amounts to pay off StanChart #ticker:SCBK. The firm had also disclosed that it was negotiating with Equity Bank to also settle the remaining claims by SBM and Ecobank but the talks have stalled.