Ecobank Kenya Limited has appointed Kereto Marima as the receiver manager who will take custody of East African (EA) Cables after it defaulted on a Ksh. 161 million loan from the lender.
The company made the announcement in a Kenya Gazette Notice with the appointment taking effect on January 31, 2020. The notice was signed by Mr. Marima on February 10, 2020. Ecobank lent EA Cables the cash through debentures- a long term security yielding a fixed rate of interest, issued by a company and secured against assets. The value of the assets taken over by the receiver is however not public knowledge.
“All matters to do with the specific assets captured by the debentures dated December 7, 2011, dated July 30, 2013 and March 11, 2015, collectively known as the debentures, shall be dealt with by the receiver,” reads part of the notice.
EA Cables however maintains, in its 2018 annual report, that it has pledged all its assets to various banks.
“East African Cables Limited (Kenya) has entered into facility arrangements with banks and the borrowings are secured by certain land and buildings and debentures over an assets of the company for Ksh. 3.2 billion,” the company says in its 2018 annual report.
This is the latest example of the cable manufacturer’s creditors liquidating the debt-laden firm. SBM Bank (Kenya) Limited also recently sought court orders to liquidate the debt-ridden firm.
EA Cables has been struggling with falling revenues and mounting losses over the past five years. The company recorded Ksh.1.6 billion in sales in 2018, down from Ksh.2.3 billion and Ksh.3.6 billion in 2017 and 2016 respectively. At the same time, the company has made an average of Ksh.851 million in losses annually since 2014 when it reported Ksh.341 million after-tax loss.
The actions by Ecobank and SBM suggest that the cables manufacturer has been unable to restructure the remaining loans.
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