Business · Companies · 3 hrs ago
Safaricom ruling triggers loan defaults for Vodacom
A Kenyan court ruling triggered default clauses in some Vodacom loans after it nullified part of the sale of a Safaricom stake to Vodacom’s subsidiary.
The ruling concerned the Kenyan government’s sale of a 15% stake, which had closed about two and a half months earlier.
Lenders gave waivers or undertakings, but some debt could not be treated as payable only after 12 months and was reclassified as current.
This moved R2.3-billion of borrowings into current liabilities, and a standstill agreement also restricted R1.2-billion in dividends held in a dedicated account.
Vodacom later obtained waivers for all defaults arising solely from the judgment.
The deal increased Vodacom’s net debt to R135.6-billion, while its net-debt-to-Ebitda ratio rose to 1.6 times from 0.9 times.
The ownership dispute is still under appeal; an appeal court has ordered the status quo to remain, and Vodacom expects a hearing date to be set before the end of December.
A Kenyan High Court ruling on 15 September triggered default and cross-default clauses in some Vodacom Group funding arrangements linked to its Safaricom deal.
Vodacom sought lender waivers, and R2.3-billion of borrowings was classified as current liabilities at 30 September.
After the reporting period, Vodacom obtained waivers for all defaults arising solely from the ruling.
A standstill agreement restricted R1.2-billion in Safaricom dividends held in a dedicated account.
Vodacom said its confidence in the deal’s strategic rationale remained unchanged.
- Who
- Vodacom Group and lenders whose funding arrangements were affected.
- What
- A Kenyan court ruling triggered default clauses in some of Vodacom’s loans, leading it to seek waivers and reclassify R2.3-billion of borrowings as current liabilities.
- When
- The ruling was issued on 15 September. The impact was reported in interim results for the six months to 30 September.
- Where
- Kenya, where the High Court ruled on the Safaricom deal, and Vodacom’s group funding arrangements.
- Why
- The court nullified the government’s sale of a 15% Safaricom stake to Vodacom subsidiary Vodafone Kenya, triggering default and cross-default clauses.
This story does not have two clearly opposing sides.
Vodacom began consolidating Safaricom as a subsidiary.
Kenya’s High Court nullified the government’s sale of a 15% Safaricom stake to Vodafone Kenya.
R2.3-billion of borrowings was classified as current liabilities, and R1.2-billion in dividends was restricted.
Kenya’s court of appeal ordered the status quo to be maintained and directed that the appeal be expedited.
Vodacom obtained waivers for all defaults arising solely from the judgment.
- Safaricom stake sale
- 15% stake sold to Vodafone Kenya
- Borrowings reclassified
- R2.3-billion
- Restricted dividends
- R1.2-billion
- Vodacom net debt
- R135.6-billion at 30 September
- Leverage
- 1.6x net debt to Ebitda; 1.3x on a pro forma basis
What people are saying
Our confidence in the strategic rationale of the transaction remains unchanged.
gave rise to certain events of default and cross-default under specified group funding arrangements