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We are talking to our lenders, says Letshego
Letshego says it has not defaulted on its obligations in its subsidiaries in Uganda and Kenya. Photo / File
What you need to know:
- Letshego, which deals in micro products such as SME loans, mortgage loans, and education loans, among others, in a corporate notice said its parent company “remains well capitalised and in a solid liquidity position”
Letshego Africa has said it has not defaulted on its obligations in its subsidiaries in Uganda and Kenya.
The tier IV company, which deals in micro products such as SME loans, mortgage loans, and education loans, among others, in a corporate notice said its parent company “remains well capitalised and in a solid liquidity position.”
“The Group’s Annual Results for 2023, first published on March 22, affirmed that the Group’s Expected Credit Loss (ECL) methodology had been adjusted, impacting 2023 results and resulting in the restatement of 2022,” the notice reads in part, noting that the ECL methodology, which has changed, thus affecting its financial performance in 2023, only predicts how much money could be lost if debtors fail to pay back and not a determinant for default.
The changes, which also impacted its financial reports for 2022, thus saw the Group indicate in its 2023 financial report that it had breached some covenants set by its lenders for loans totalling about Shs780.7b in Uganda, Kenya, and Botswana, of which, Shs93.68b was due to its Kenyan unit but couldn’t make timely repayments, which the lender considered acceptable.
Similarly, in Uganda, Letshego had not made timely repayments on its Shs18.98b loan, while in Botswana the company had not mobilised enough liquid assets (cash or things that can quickly be turned into cash) to match its liabilities, thus forcing it to evaluate if it could continue to operate normally, in consideration of macro-economic challenges that could impact its ability to immediately pay back multiple loans, whose covenants it had breached.
“In the extreme circumstance of the Group not able to roll forward existing facilities and also not being able to access new funding earmarked in its future pipeline, [and] in the absence of … mitigating factors, a forecast cash shortfall of approximately [Shs942.2b] would be experienced during the period extending to 13 months after the issue of financial statements,” the Group noted.
However, it said that “the above scenario is, however, highly unlikely and following on from this, it assessed the going concern assumption as appropriate”, further noting that it was talking with lenders to sort things out, while also seeking “letters of no action”, in which lenders would not take immediate action for breached loan covenants.
New facilities
Letshego says its funding pipeline of new facilities was still at the early stages of negotiation, “where the term sheets are yet to be finalised, based on a conservative rate of 60 percent, although in the past the Group has been able to convert new funding pipeline at rates that are more than this”.
