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EABL eyes banks to retire Sh5bn bond

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From left: EABL Group chairman Martin Oduor-Otieno, managing director Andrew Cowan, his Kenya Breweries Limited counterpart Jane Karuku and EABL dinance and strategy director Gyorgy Geizsl during the EABL half year results announcement on January 31. PHOTO | SALATON NJAU

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Summary

  • EABL says it has received “attractive” opportunities from commercial banks.
  • This will also save it from having to pay the lump sum amount in March from its own cash reserves when it is still pursuing capital investments.
  • EABL issued a fixed medium term note of Sh5 billion in March 2015, followed by another one worth Sh6 billion in April 2017.
  • The first one matures this March while the second tranche will mature in March 2022.

East African Breweries Limited (EABL) #ticker:EABL will use banks to refinance the Sh5 billion bond set for maturity in March, shunning the option of going back to the Nairobi Securities Exchange (NSE) to roll over the debt.

The brewer, with operations in Kenya, Uganda and Tanzania, says it has received “attractive” opportunities from commercial banks. This will also save it from having to pay the lump sum amount in March from its own cash reserves when it is still pursuing capital investments.

“Given the very attractive refinancing opportunities that we can get directly from the banks we work with, we are not planning to go back to the market for the maturing bond,” EABL group finance director Gyorgy Geiszl said.

EABL issued a fixed medium term note of Sh5 billion in March 2015, followed by another one worth Sh6 billion in April 2017. The first one matures this March while the second tranche will mature in March 2022.

Mr Geiszl said during the release of half year results for period ended December 2019 that EABL has already agreed with banks to refinance the first one, while the Sh6 billion paper refinancing option “is still under consideration.”

EABL made a Sh14 billion investment in the Kisumu brewery in 2018. In the six months to December last year, it made a further Sh4.4 billion investment in boosting production capacity for its existing and new brands in the region.

The firm said it will invest further during the financial year but ruled out issuance of another bond for this.

“We have a strong cash performance and so we are able to fund future capital expenditure at the existing level of borrowing without needing additional level of funding,” said Mr Geiszl.