Shelter Afrique woes deepen as it seeks loan restructuring
SEE ALSO :Top Treasury man yet to take key postThis has been kept alive by hunting for support from its shareholders but would now need a radical debt restructuring to pull through. On 30 September 2013, the Issuer issued an initial tranche of the Sh5 billion Fixed Rate Notes and Floating Rate Notes due September 30, 2018 which it insists it can still settle. The actual principal aggregate value of the Notes outstanding as at the date of the Memorandum was Sh825 million, the balance having been paid in line with the Pricing Supplement (details about the specific security issuance) dated September 6, 2013. The bank said that during the standstill period - time while they are negotiating restructuring - the existing debt obligations will be restructured. The process is expected to commence after completion of the independent business review expected to be finalised by the end of this month.
SEE ALSO :Debt is a useful financial tool“During the standstill period, Shelter Afrique shall not, save with the consent of the lenders that have entered into the standstill agreement, incur any new financial indebtedness (with the exception of the emergency liquidity facility between AfDB and Shelter Afrique for a nominal amount of Sh2 billion ($20 million) the CBA restructuring and any foreign exchange transactions in relation to the normal course of business,” the lender said. However CBA boss declined to give details of the help they will be granting Shelter Afrique. “As a matter of policy, we do not comment on client transactions due to confidentiality reasons,” said CBA Group Executive Director Martin Mugambi. The lender has been forced to re-look its business in a move that will see it abandon private projects which have been notorious for defaults. It has promised its creditors that it intends to change the business model to funding public private partnership housing developments and co-operatives as well as scaling down on private sector construction finance housing developments Due to the crisis, Shelter Afrique limited disbursement last year to committed and existing projects only estimated at (Sh5 billion) $50 million. In 2017, the cash outflow on disbursement was Sh2.8 billion ($28 million). The lender says it has improved collections from its existing loan portfolio. For the year ended December 31, 2017, Shelter Afrique collected Sh8 billion ($79.9 million), a year-on-year improvement of approximately 56 per cent. The mortgage lender also said it wants to invite new shareholders to help it meet maturing debt as countries drag their feet to fund it. Shelter Afrique which is co-owned by 44 African nations, the AfDB and the Africa Reinsurance Company has been calling for a bailout to meet liquidity ratios, pay its debt and finance needed its strategic goals. Kenya is the largest country shareholder, with an 11.16 per cent stake. “We are exploring shareholder financing, we have raised a significant amount from our current shareholders, and we have also resolved to open a new class C group of shareholding for African and non-African entities alike,” Pan African real estate financier said in an email. “We have begun talks with some keen organisations and countries who share our commitment to affordable housing in Africa.”