Shareholders of Deacons East Africa approved a Sh450 million convertible loan in March 2019 to address financial obligations and avert liquidation, according to a resolution from an extraordinary general meeting in Nairobi.
The joint administrators, Peter Kahi and Atul Shah, received authority to secure funding from willing lenders to cover working capital needs and outstanding debts. The resolution explicitly stated: "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 the form of convertible loan(s) from any person(s) willing to lend or grant such funds to the Company."
The loan would target debts to NIC Bank (Sh387.55M), UBA (Sh152.81M), Kenya Revenue Authority (Sh62.34M), and staff obligations (Sh41.6M). A portion would support working capital requirements. Administrators warned that liquidation would yield only Sh63 million, resulting in a Sh1.9 billion loss for stakeholders.
The decision followed a January 2019 meeting where creditors urged shareholders to inject the full Sh450 million. Administrators also secured approval to seek independent transaction advisors to identify potential buyers, with an expression of interest due by month's end and a potential sale deadline of September if interested parties emerge.
Deacons entered administration in November 2018 after years of financial distress, with creditors seeking immediate liquidity solutions to prevent further losses.
