Guardian Holdings Limited (GHL) is getting a US$75 million injection which the company says will improve its cash flow and reduce its debt-servicing costs.
The shareholders of GHL unanimously approved an agreement for the IFC, a member of the World Bank Group and the IFC African, Latin American and Caribbean (ALAC) Fund to invest US$75 million in equity in the company.
This announcement was made last week.
Chief executive officer of the GHL group, Jeff Mack, identified several benefits of this investment, noting that “it increases financial flexibility, improves cash flow by eliminating higher debt-service cost, lowers the company’s leverage ratio, while providing additional capital in support of GHL’s strategic growth plans.
“At the same time the transaction brings in a strong, reputable partner who has the funds available for follow-on investments.”
The investment includes US$56.25 million for IFC’s account and US$18.75 million from the IFC ALAC Fund which is managed by IFC Asset Management Company.
The transaction is part of IFC’s strategy to expand its investment activities in the insurance sector, with the goal of increasing availability of insurance products that address individual needs, such as health insurance, and access to insurance products for smaller businesses, microfinance institutions and agribusinesses, a release from GHL noted.
Arthur Lok Jack, chairman of Guardian Holdings, expressed confidence that “this long-term partnership will foster new growth opportunities for the GHL group, our shareholders, stakeholders and the wider community”.
He further noted that the elimination of US$50 million in debt previously owed to the IFC, which will now be converted into common equity at a premium above GHL’s share price, will be accretive to GHL’s future earnings.
The conversion will remove debt-service costs related to the loan of over US$4 million annually, while eliminating the need to set aside funds to pay off the US$50 million principal at the end of the loan’s term. (NB)
