Real People again defers payment of Sh1.26bn bonds

Struggling South African-linked credit-only micro-finance firm Real People Kenya is on course for a third extension of the repayment of Sh1.26 billion bonds that will see it pay noteholders in 2028.

The firm said on Thursday it held a meeting with the holders of Sh267.1 million and Sh1.04 billion notes who agreed to the proposal through a special resolution, subject to it securing a strategic investor.

“Subject to the issuer (Real People) securing an agreement with an investor whose identity shall be approved by noteholders holding 75 percent of the notes…the final maturity dates for all the notes be extended to August 3, 2028,” read the statement.

In the meantime, the firm has secured a second extension on the maturity of the 13.65 percent three-year fixed rate note of Sh267.1 million from January 6, 2019 to August 3. The note was initially scheduled for August 6, 2018 maturity.

Further the interest on this note, together with that on Sh1.04 billion five-year note, has been changed from fixed interest rate of 13.65 percent to a floating rate.

The rate will be based on the yield of 91-day Treasury bills plus one percent compounded half yearly subject to a minimum rate of seven percent and maximum rate of 10 percent.

If the firm secures an investor and gets the nod from the noteholders, the notes will be redeemed in four equal tranches on August 2022, July 2024, July 2026 and July 2028.

The medium-term note launched in early August 2015 targeting retail, high-net worth individuals and institutional investors.

The firm hopes the extension will alleviate the debt and interest burden borne by the company.

Launched in Kenya in 2006, it has struggled to make a profit. The firm, with accumulated losses of Sh912.6 million and a negative equity of Sh162.5 million by end of September 2018, had at one point tried to convince noteholders to convert the notes into equity.