Deacons East Africa resolve to raise KES 450m through convertible loans

Deacons East Africa’s Joint Administrators To Seek its Liquidation

East Africa’s leading apparel and household goods retailers, Deacons (East Africa) Plc (NSE: DCON) unveiled a financing plan which will support the working capital required and settling its outstanding debt.

78% of the shareholders unanimously resolved to raise Ksh 450 million in the form of convertible loans and 22% were against.

“That in order for the company to raise the amount of up to Kenya shillings four hundred and fifty million which is required to support the working capital requirements of the company in the first instance and to utilise the balance towards settling the company’s outstanding creditors and secured lenders, the Joint Administrators be and are hereby generally and unconditionally authorised to exercise the borrowing powers of the company to raise the required funds in in the form of convertible loan (s) from any person (s) willing to lend or grant such funds to the company on such terms and conditions as shall be agreed between the parties subject to obtaining all the required regulatory approvals.”

Convertible debt: you borrow money from investors with the understanding that the loan will either be repaid or turned into a share in the company at some later point in time.

In February, the investors passed an ordinary resolution to raise Kshs 450 Million required to settle the Company’s outstanding creditors and secured lenders.

Currently, its shares have been suspended from the Nairobi Securities Exchange until 30 November 2019 following a proposal from the joint administrators to appoint an Independent Transaction Adviser, subject to the company trading at a profit by September 30, 2019.