Botswana-based lender Letshego Holdings Ltd (LHL) has defaulted on a $30.49 million mortgage for its Kenya and Uganda subsidiaries and trimmed 142 jobs within the items, simply 15 months after the corporate warned of an imminent exit from the area this 12 months on deteriorating financial situations.
Disclosures confirmed defaults on the Kenya and Uganda loans are a part of a $210.95 million debt that the Botswana Inventory Change-listed lender didn’t repay as scheduled amid a $10.82 million loss for the 12 months ended December 31, 2023, that casts doubt its operations as a ‘going concern’.
The debt covenant breaches present had implications on excellent obligations amounting to roughly P2.9 billion ($210.95 million) on the reporting date (December 31, 2023).
In gentle of the attainable implication of this efficiency and the existence of debt covenant breaches on the Group’s liquidity and funding pipeline, administration made an evaluation of the group’s skill to proceed as a going concern,” the lender stated in its newly revealed annual report for 2023.
The breaches of the mortgage covenants on Letshego’s items in Kenya and Uganda had been Sh3.26 billion ($25.37 million) and Sh658.77 million ($5.12 million), respectively.
The lender nonetheless says it has put in movement mitigation elements together with discussions with funders for which ‘letters of no motion’ had not been obtained.
The lender says talks with financiers are on- going, and the group may be very optimistic in receiving some reduction.
“Within the excessive circumstance of the group not with the ability to roll ahead present services and in addition not with the ability to entry new funding earmarked in its future pipeline………, a forecast money shortfall of roughly P3.5 billion can be skilled by the group throughout the interval extending to 13 months after the difficulty of the monetary statements,” in accordance with the report.
Letshego diminished its workforce in Kenya, Tanzania, and Uganda by 43, 69, and 30 respectively, whereas in Rwanda there was a slight addition of three workers. In March final 12 months the lender issued an alert over an impending closure of its operations in three East African markets— Kenya, Rwanda, and Tanzania—this 12 months over worsening situations.
It categorized the three areas (Kenya, Rwanda, and Tanzania) together with Ghana and Nigeria as ‘turnaround markets’ that are presently unfit for development and appointed a turnaround grasp Fergus Ferguson, the previous Chief Government of Botswana with oversight over Eswatini and Lesotho (Boleswa), because the regional CEO to supervise their restoration in 10 months, failure to which a closure choice might be made this 12 months to keep away from additional monetary bleeding.
“The appointment of a regional chief govt supported by a reliable crew will oversee the transition of those companies. Nonetheless, whereas geographic rebalancing stays a key strategic dialog for the group, it is not going to be pursued on the expense of shareholder worth,” the lender says.
