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Tugende in talks with US lender to restructure Shs18.6b loan
Tugende Kenya borrowed Shs18.6b, part of which was lent to the Ugandan unit. Photo / Courtesy
What you need to know:
- Tugende Kenya borrowed $5m (Sh18.6b) in 2021, of which $1.9m (Shs7b), Goldfinch says was irregularly lent to the Uganda unit to shore up operations weakened by macroeconomic factors.
Tugende has said it is in talks with its US lender, Goldfinch, to restructure the $5m (Sh18.6b), now in default and matures in October.
Tugende Kenya borrowed the money in 2021, $1.9m (Shs7b) of which, Goldfinch said, was irregularly lent to the Uganda unit to shore up operations weakened by macroeconomic factors.
In an investor briefing last month, Goldfinch reported it had discovered the irregular inter-company lending in December 2022, and efforts to remedy the situation had not yielded positive results.
“The Tugende Kenya facility will need to be restructured, leading to losses possibly [of] up to the entire amount of the loan,” Goldfinch told investors.
Tugende confirmed discussions were ongoing with the hope of reaching a positive outcome.
“We are in ongoing discussions with all our current investors, including Goldfinch on capital solutions that ensure positive outcomes for all our stakeholders,” Mr Michael Wilkerson, the Tugende founder and chief executive officer, said in a statement.
However, details of the discussions were not readily available.
In 2022, Tugende, which operates a subsidiary in Kenya under a holding company based in Mauritius - Tugende Global - stepped up efforts to improve its balance sheet, which had been impacted by a tough global macroeconomic environment.
The slowdown occasioned by Covid-19 restrictions resulted into a rise in repossessions and lease cancellation, impacting the company’s balance sheet. .
Mr Blake West, the Goldfinch chief technology officer, told investors during a live presentation last Thursday that they were certain that the loan recipients, Tugende Kenya and Uganda, were not in a position to repay the $5m (Shs18.6b), noting that they were currently in talks with beneficiaries to recover value from the loan.
