Lifeline for Vodafone creditors as Nedbank nods to share buyout
March 21, 2017- Prospects are looking up for troubled telecom operator Afrimax Uganda (trading as Vodafone), after South African lender Nedbank nodded to proposed share buyout by minority shareholder Aim Holdings.
Nedbank, the only secured lender, holds USD 13.8 million of Afrimax’s total debt of USD 82.6 million, giving it the first call on the company’s USD 15.4 million in assets. Any settlement besides liquidation therefore requires their agreement.
The deal that was scheduled for signature today, comes after Vodafone provisional administrator Donald Nyakairu, convinced creditors’ in a February 26 meeting that allowing the company to continue trading as a going concern was the only viable way of securing the interests of all creditors.
“A sale of the assets and business as a package is likely to realise a higher return than a liquidation,” Nyakairu told the meeting during which he presented a stark picture of the state of affairs at Vodafone Uganda.
Eight percent of its network was offline after mast operators switched it off, while Vodafone had also terminated the non-equity branding agreement that allowed Afrimax to trade under the name.
According to sources, Aim Holdings, represented by a one Mitesh, offered to buyout Afrimax Uganda B.V after the latter converted its credit to the company into equity. Aim Holdings has committed to inject into the company USD 6 million in three tranches over a six month period ending September 30, to help the company resume operations.
Mr. Nyakairu told the creditors’ that if they agreed to a moratorium on enforcing their claims against the company, the operation would on average need USD 750,000 per month to run.
If the deal falls through, unsecured creditors would be left holding the can since only USD 972,291 would be left against USD 68,102, 476 that is owned to unsecured creditors among them suppliers and landlords.
“If these creditors do not cooperate then the company’s fate and that of other creditors is doomed, and we might as well agree that the company be liquidated and pray that the sale of the assets will realized enough funds to be distributed initially to the preferential creditors, the secured creditor and thereafter to the unsecured creditors,” Nyakairu told the meeting.
Despite the reprieve, and apparent agreement by the new owner to settle claims, no timeline has been provided for the settlement of creditor claims. It was also not immediately clear if the new shareholders will settle all outstanding claims in full or negotiation hair-cuts with the creditors.