Companies

Shelter Afrique says bondholders set to be paid this week

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Shelter Afrique listed a Sh5 billion five-year medium-term unsecured note on the NSE in 2013 with a September 28, 2018, maturity date. FILE PHOTO | NMG

Pan-African housing financier Shelter Afrique says it will make a final tranche of payments amounting to Sh877 million to creditors by end of this week.

The announcement comes as good news for the company’s investors at a time when several firms have extended the repayment period of their notes while others have defaulted.

“We shall absolutely be paying the bond as scheduled on September 23, which is a Sunday and therefore value date might be September 24 or earlier to be advised by the custodian bank,” Shelter Afrique’s acting managing director Kingsley Muwowo told the Business Daily on Monday.

“Testimony to this, please be informed that we have already funded the custodian account at Stanbic Bank Kenya in readiness for credit to bondholders effectively liquidating the Sh5 billion bond raised in 2013.”

The amount to be paid includes Sh825 million in principal amount and Sh52 million in interest. Shelter Afrique listed a Sh5 billion five-year medium-term unsecured note on the Nairobi Securities Exchange (NSE) in 2013 with a September 28, 2018, maturity date.

The experience of TransCentury’s #ticker:TCL private bond last year highlights the potential pressure the maturity of such instruments exert on some companies. The investment firm nearly defaulted on its Sh8 billion bond that matured on March 25 last year, roiling the investment’s C-suite, finances and stock price.

TransCentury eventually closed the matter after bondholders agreed to a Sh4 billion haircut. ARM Cement #ticker:ARM, which is under administration, in June this year defaulted on interest payment on a privately placed bond which it issued in 2015, underlining the extent of the firm’s cash flow crisis.