Real People seek Ksh.187 million debt forgiveness from bondholders

The proposal would see bondholders agree to waive Ksh.187 million in due payments.

The request is a precursor to a fresh equity investment which will see South African based Real People International Holdings, the company’s majority shareholder who holds a 99 per cent stake exit.

In a new notice to bond holders, Real People says the proposed haircut has been submitted by Mauritius-based investment firm Chike Africa.

The firm is set to become the new owners of the Real People business in Kenya by investing an estimated Ksh.675 million ($6 million) in two equal tranches.

In addition to the haircut, Real People the bond holders to waive accrued and unpaid interest for the period from August 2020 to February 2022.

The 30 per cent balance in principal is expected to be cleared in three equal instalments starting from February 28, 2023 to February 28, 2025.

The holders of the bond whose redemption has been delayed by three times to date are expected to vote on the offer on December 21 at an extraordinary meeting.

Real People says its operations could be severely constrained if it redeems the notes as scheduled in February.

The company would have to curtail its business operations extensively, in so doing and by the outflow of almost all of its cash reserves, the sustainability of the company will be damaged.

Real People’s business has remained a going concern in recent years as its current liabilities continue to outstrip current assets meaning it cannot meet its short term obligations including that to creditors.

Real People raised Ksh.1.6 billion as the first part of a planned Ksh.5 billion corporate bond in August of 2015 with the view of channelling the monies to its SME funding business in Kenya.

Nevertheless, the company sank into financial distress almost immediately prompting the intervention of the Capital Markets Authority (CMA) and the subsequent suspension of the bond’s full issuance.

In March this year, the market’s regulator issued fines of Ksh.15 million to former directors of the company after establishing proceeds of the bond had been diverted to the parent company in South Africa to pay for an internal loan.