EABL secures a Ksh12.5 billion loan for Kisumu Keg plant
The EABL is set to create 100,000 direct and indirect employment opportunities and double the demand for sorghum to 40,000 tonnes in the next 3-5 years. This is after the brewer secured a 12.5 billion long-term loan from the Standard bank group. The money is set to go into the recently launched construction of a senator keg factory in Kisumu.
The brewer secured a Ksh7.5 billion loan from The Standard group and the balance cleared by Stanbic holdings, its Kenyan subsidiary.
On its part, EABL is set to dig about 2.5 billion from its accounts for the completion of the project which is expected to start operations 2019.
“We managed to secure a Sh12.5 billion long-term facility,” said Gyuri Geiszl, EABL’s finance director. “We have just drawn down a small portion, about Sh2 billion since the project has just started. As we move along, we shall generate the cash flow to fund the remaining portion.”
However, the brewer did not disclose the terms of the loan facility or its applicable interest rate. Stanbic holdings is one of the brewer’s principal bankers alongside Barclays bank, Citibank and Standard Chartered Bank. The four have been involved in providing funds for EABL’s megaprojects. EABL has in the recent past relied on its parent company Diageo (which owns 50.1%) to fund its major projects.
“Six months ago, we had a couple of ideas of how we were going to fund the Kisumu brewery, but we eventually settled on debt,” Mr Geiszl said without disclosing the options dropped.
Construction of the upcoming factory, which sits on land occupied by defunct EABL brewery, commenced in July with its projected annual production capacity being 100 million liters.
Senator Keg, a drink dispensed in mugs from barrels, has emerged as beer volume driver for the regional brewer due to its low purchase price of about Sh30 per 300ml mug.
In the half-year under review, this drink did not perform as per previous years, with sales dropping by Sh1.5 billion. EABL’s management says this drop in volumes partly resulted from the factory’s closure for two months beginning July to facilitate Sh436 million capacity expansion works.
Increased inflation, the extended electioneering period and a Sh5 increase in the price per mug, following changes in excise tax applicable, also dragged down consumption