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Bondholders extend lender’s repayment : The Standard

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Real People Investment group is a microfinance holding company along Mama Ngina Street in Nairobi. [Jonah Onyango/Standard]

Investors in South African micro-lender, Real People, will take a 5.3 per cent cut on their deal as the firm struggles to redeem a Sh1.3 billion bond.

The lender has talked to investors to extend its repayment period to yet another date, until August next year to avoid default.
In August this year, investors in the bond issued by the lender refused to convert the loan into shareholding, opting to wait five more months for their money.
In a notice, Real People said it had met the investors of the Sh1.3 billion notes to renegotiate the terms for the bond that matured on Monday.

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New initiative
They resolved to wait for payments until January. The had admitted it had no cash to meet the bond liabilities and was pursuing the new initiative to avoid default on its three-year Sh267 million medium-term note that matured on Monday.
Its ability to meet payments for the five-year Sh1.036 note matures in 2020 was also put in question.
Now, with January approaching, the lender again sought relief from its lender for another eight months pardon. “At a meeting with the noteholders on December 10, 2018, the noteholders by means of extraordinary resolution resolved that the maturity dates for the 13.65 per cent three-years fixed note due on January 2019 be extended to August 6, 2019,” Real people said in a notice.
Real People was able to get relief after its creditors agreed to cap the rates to 10 per cent from the current 13.65 per cent and altered its terms to a floating rate, rather than a fixed rate that had increased the cost of the loan at a time of the rate cap law.

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The lending rate in Kenya at 13.5 per cent meant that the cost of money was more expensive than what the lender could offer its clients.
The bonds will now be charged at the 91-Treasury Bill, which is currently at 7.35 per cent, plus one per cent compounded yearly. This means the lender will be paying 8.35 per cent. The minimum rate chargeable will be seven per cent, while the maximum rate will be 10 per cent.
Part of the loan payable by 2019 is also under negotiations to be extended by nine years to August 2028 although the interest for this portion has not been set. The lender is said to be working hard to ensure the business stays afloat even as it sought other options to inject new capital in equity.
The firm said ‘sub-scale’ revenue generating activities sank the firm into a loss of Sh371 million as at March this year, from a loss of Sh591 million in a similar period last year.
The lender has written off Sh1.3 billion over the past two years, blaming the loss on a difficult operating environment.

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Real PeopleSouth African micro-lenderbond





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