Botswana-based lender Letshego Holdings Ltd (LHL) has recently defaulted on a substantial $30.49 million loan allocated to its Kenya and Uganda subsidiaries. This financial setback comes alongside the trimming of 142 jobs within these units, merely 15 months after the company hinted at a potential exit from the region due to worsening economic conditions.

Financial Struggles and Loan Defaults

Letshego Holdings Ltd has encountered significant financial difficulties, defaulting on a $30.49 million loan designated for its Kenyan and Ugandan operations. This default is part of a larger debt totaling $210.95 million that the Botswana Stock Exchange-listed lender failed to repay as per the scheduled timeline. The financial strain is further highlighted by a $10.82 million loss for the year ending December 31, 2023, raising serious concerns about the company's viability as a ‘going concern.’

Implications of Debt Covenant Breaches

The lender's failure to meet debt covenants has had severe implications on its outstanding obligations, which amount to approximately P2.9 billion ($210.95 million) as of December 31, 2023. In their 2023 annual report, Letshego emphasized the potential impact of these breaches on the group’s liquidity and funding pipeline, leading management to reassess the company's ability to continue operations.

Specific Financial Breaches in Kenya and Uganda

The specific breaches of loan covenants within Letshego’s subsidiaries in Kenya and Uganda amount to Sh3.26 billion ($25.37 million) and Sh658.77 million ($5.12 million), respectively. These breaches underscore the lender’s significant financial challenges in the region and contribute to the overall strain on its financial health.

Management's Response and Future Outlook

In response to these financial challenges, Letshego’s management has undertaken a thorough assessment of the group’s ability to continue as a going concern. The lender's newly published annual report for 2023 sheds light on the difficult decisions and strategic evaluations necessary to navigate this turbulent period.