UAP Sinks Ksh518 Million In Losses, As Old Mutual Debt-to-equity Deal Flops

UAP Holdings Limited lost Ksh518 million in the year ending December 2018, down from Ksh608 million profit made in same period the previous year.

According to CEO Peter Mwangi, the business was faced with a tough working environment during the period. In recovery plans, Mwangi says that they will “let go of accounts we couldn’t price properly”.

“Performance was impacted by a tough operating environment in Kenya and the wider region. We have had to let go of accounts we couldn’t price properly and that has had an impact on the top line,” said Mwangi.

This comes at a time when the parent company, Old Mutual, suspended plans to convert its loan to UAP into equity. Old Mutual was supposed to take up 6.5 per cent in exchange for its Ksh2.6 billion loan advanced to UAP.

According to Mwangi who spoke to Business Daily, the deal now remains an option for Old Mutual.

“No decision has been taken on the conversion. The debt is outstanding and convertible at the option of the lender. The terms of the loan have been amended to extend the tenure and we continue to service the debt,” said Mwangi.

Currently, Old Mutual holds the controlling stake at 67 percent, following acquisition a six percent of shares belonging to founding shareholders Joe Wanjui and James Muguiyi at Ksh3.2 billion last year.

Read: UAP Old Mutual Loses Bid To Insure Public Servants

In the year under review, the company borrowed up to Ksh11 billion, a Ksh258 million increase from last year. Finance costs rose by Ksh245 million to Ksh1 billion.

Following the loss, investors will not receive any dividend unlike last year when the board declared Ksh1.70 per share amounting to Ksh359 million.

The group also retrenched 89 employees at a cost of Ksh342 million.

The company also wrote off Ksh400 million loan advanced to cash strapped Athi River Mining company and Ksh100 million advanced to Tanzania’s Bank M.

Last year, High Court judge John Mativo has quashed a decision by the Public Procurement Administrative and Review Board (PRAB) awarding UAP Life Assurance a multi-million-shilling tender for civil servants’ insurance.

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