UAP gets more time to settle Sh8bn Old Mutual, Stanbic loan

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UAP gets more time to settle Sh8bn Old Mutual, Stanbic loan


UAP Insurance Building in Nairobi. PHOTO FILE | NMG

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  • Insurance group UAP Holdings has restructured 8 billion shillings in loans from its parent company Old Mutual Holdings and Stanbic Bank, delaying repayment of credit facilities by two to three years.
  • A 2.2 billion shilling loan from Stanbic Bank, which was due to mature in January 2021, will now be repaid in 2024.

Insurance group UAP Holdings has restructured 8 billion shillings in loans from its parent company Old Mutual Holdings and Stanbic Bank, delaying repayment of credit facilities by two to three years.

A 2.2 billion shilling loan from Stanbic Bank, which was due to mature in January 2021, will now be repaid in 2024.

“This refinancing deal was made after the year-end in February 2021. The new facility has a three-year term,” UAP said of the Stanbic loan in its latest annual report.

The insurer took out the bank loan on July 17, 2019 and used it to repay its corporate bond, which was then due. The Stanbic loan drew an interest rate based on the central bank rate (currently at seven percent) plus a 1.5 percent margin.

A loan of 5.8 billion shillings from South Africa-based Old Mutual, which has a 66.7% stake in the insurer, was also due in January 2021 and will be paid next year.

“By mutual agreement with the directors of Old Mutual Holdings Limited, the maturity date of loans maturing in January 2021 for a total of 5.8 billion shillings has been extended until 2022, with the directors taking arrangements to settle the loan, ”UAP said in the report.

Part of the Old Mutual loans were used to withdraw a 3.3 billion shillings facility from South Africa-based Nedbank last year.

Old Mutual loans have variable interest rates ranging from 7.6% to 11.1% based on the margins added to various benchmarks including CBR and the 3-month London Interbank Offered Rate (Libor) .

This is the latest loan restructuring at UAP following the insurer’s renegotiation of credit facilities (including those provided by Old Mutual and Stanbic) totaling 10.1 billion shillings in 2019.

UAP also renegotiates the terms of other loans after breaching them.

“During the year one violation was recorded for the Norfund and IFC facilities at UAP Properties in South Sudan. The outstanding balance of the two facilities as at December 31, 2020 was $ 3.3 million (357 million shillings) divided equally between the two lenders, ”said the insurer.

“Repayments continue to be made on loans on a timely basis. To remedy the breach, management urges the lenders to renegotiate the covenants. “

PSU borrowings reached 13 billion shillings in the year ended December, up from 11.4 billion shillings a year earlier, while interest charges over the period fell to 1.1. billion shillings against 1.2 billion shillings.

The insurer reported a net loss of 1.3 billion shillings in the year ended in December, reducing it from 3.4 billion shillings a year earlier.

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