East African Cables hopes to reach an out-of-court deal with SBM Kenya, which is seeking to liquidate the loss-making manufacturer for defaulting on servicing a KES 285 million unsecured loan, Business Daily reported. CEO Paul Muigai said he was confident the listed electrical and communications cables and conductors maker will reach an agreement with the lender on repayment terms for loan that it took out in 2014.
Last December, SBM filed an insolvency petition, which caused Ecobank to demand KES 190.5 million from EA Cables. Ecobank then appointed Kereto Marima as the receiver manager, a decision that EA Cables has challenged in court. SBM's request to consolidate all other cases filed against the loss-making firm was rejected last week by Justice David Majanja.
The judge ruled that SBM (formerly Chase Bank) has no interest in EA Cables' property secured in favour of Ecobank as its facility was not collateralised. SBM was among lenders that funded EA Cable's KES 2 billion expansion between 2014 and 2016 under which it extended production two-fold to 750 tonnes a month, modernised one of its two factories in Kenya, and invested in new technology.
