SBM Bank Kenya now wants East African Cables liquidated for defaulting a Ksh285 million loan.
The TransCentury owned company is said to be unable to meet its financial obligations, forcing the lender to move to court to seek liquidation under the Insolvency Act 2015.
Previously, the company was involved in a Ksh1.56 billion loan tussle with Standard Bank Plc Kenya and Tanzania, before finally borrowing to pay the loan agreed at Ksh1.6 billion.
East African Cabled is said to have borrowed the amount from Equity Bank, and is in talks with the same lender to borrow Ksh285 million more to pay off the SBM Bank loan.
The company also owes Ecobank Kenya Ksh161 million, and could be planning to borrow to settle the same loan.
“Notice is hereby given that a creditor’s petition for the liquidation of the above mentioned company (EA Cables) by the High Court was on December 9, 2019 presented to the said court by SBM Bank (Kenya) Ltd,” read the liquidation suit in part.
Interested parties supporting or opposing the petition have been given up to February 4, 2020 to send their representatives, when the matter will be heard.
Cumulatively, Equity Bank is owed at least Ksh2 billion by the lender, and most of its assets are pledged to Equity.
Business Daily reports that the company has incurred annual finance costs of more than Ksh500 million when its ability to deliver on contracts has been constrained.
By the end of 2018, its short term liabilities exceed current assets by Ksh3.2 billion, putting it on the red line. Current liabilities stand at Ksh3.8 billion
The company has made an average of Ksh851 million in losses annually since 2014 when it reported Ksh341 million after-tax loss. The winding down petition from SBM indicates that talks to restructure the firm’s Ksh3.8 billion in debt have failed to yield fruit.