The facility is in form of convertible loan to save the troubled fashion retailer.
Troubled fashion retailer-Deacons East Africa has received the support of majority shareholders to push for a Sh450 million (US$4.5 million) credit facility to help support the cash strapped firm.
At an extraordinary general meeting of Deacons (East Africa) PLC (In Administration) held on March 5, 2019, the shareholders unanimously resolved to amend the resolution that had been circulated, authorising joint administrators Peter Kahi and Atul Shah to get the loan.
The facility is in form of convertible loan to save the troubled fashion and clothing retailer.
78 per cent of shareholders (60,068,352) voted in support of the move against 22 per cent ( 16,688,416) who voted against.
The amount is required to support the working capital requirements of the company in the first instance, and to utilize the balance towards settling outstanding creditors and secured lenders.
“..the Joint Administrators be and are hereby generally and unconditionally authorised to exercise the borrowing powers of the Company to raise the required funds in the form of convertible loan(s) from any person(s) willing to lend or grant such funds to the Company on such terms and conditions as shall be agreed between the parties, subject to obtaining all the required regulatory approvals,” the firm said in a statement signed by company secretary John Maonga.
Securing the convertible loan will offer some reprieve to the Nairobi Securities Exchange (NSE) listed firm (under administration), whose shares were suspended from trading in November last year.
Biggest beneficiaries from the move will be NIC bank and UBA which are owed Sh387.6 million and Sh152.8 million respectively.
The firm is also indebted to the Kenya Revenue Authority which is claiming Sh62.34 million.
About Sh50 million of the loan is expected to support working capital requirements while the remaining amount will go towards sorting outstanding creditors and secured lenders.
This week’s meeting comes two months after a January meeting between the joint administrators and creditors where creditors wanted top 20 shareholders compelled to inject the much needed Sh450 million.
The administrators are also expected to help source for a buyer with an expression of interest expected to be up by end of this month.
A buyer will help salvage the company whose liquidation would only fetch Sh63 million, according to the administrators, a move that would lead to a Sh1.9 billion loss to shareholders and creditors.