In January 2020, the media reported a court petition by the State Bank of Mauritius (SBM) to liquidate the East African Cables over a $2.85 million (Ksh285 million) debt. However, the two parties have reached an agreement, recently, on the restructuring of the $2.85 million (Ksh285 million) debt that is due and payable on demand.
“The withdrawal of the petition is a significant step towards the company’s turnaround plan that includes strengthening of the balance sheet, operational improvement and having the right funding structure for growth and profitability,” said Virginia Ndunge, the Company’s Secretary.
She added that the new arrangement involves a restructuring of the outstanding facilities by the bank under a new long term facility and security arrangement. This would give the indebted cable maker a lifeline in its recovery efforts.
In 2018, the cable manufacturer hired a consultant to help in spacing out its Ksh 3.06 billion debts. According to one of its top officials, the board engaged the services of a debt restructuring consultant to work with the management and its lenders for a workable solution.
The plan was for the consultant to conduct an independent review of the business and advise the management and the lenders to facilitate the refinancing of existing loans. But the negative working capital and losses made its external auditors, KPMG cast doubt on its ability to continue as a going concern.
Its list of debtors includes Standard Chartered Bank Kenya, Standard Chartered Bank Tanzania, Ecobank Kenya, SBM and Credit Bank Kenya Ltd.
The company has already defaulted on some of its loans. As of 2018, it offered for sale three properties located in Nairobi and Dar es salaam valued at Sh640 million with aims to use the proceeds to boost working capital.
Lists on the Nairobi Securities Exchange, the East African Cables is a huge electronic and telecoms cable maker which services the East and Central African Markets.