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Inside Threeways Shipping Company’s Battles With StanChart & Its Journey To Business Recovery

Geoffrey B. Baitwa (Left) and Daniel Pettersson, both Co-Managing Directors at Threeways Shipping Services (Group) Ltd, during the interview

Threeways Shipping Company, a flagship brand of Bro Group Limited, is successfully battling its way to business recovery after undergoing financial distress that threatened the survival of the logistics solutions giant.

Bro Group Ltd is a holding company with three fully owned subsidiaries – Threeways Shipping, Transtrac and Threeways Distribution.

A number of Ugandan companies that have been placed under receivership have not survived, but Threeways Shipping Company has battled its way back into business after it went into receivership in 2017.

This is after the company initially failed to honour its loan obligations to Standard Chartered Bank commonly called StanChart.

It should be recalled that Threeways Shipping agreed a combined USD 4.4 million (UShs16.5bn-going by the current exchange rate) loan from Standard Chartered Bank in 2015 consisting of various specific facilities.

Geoffrey B. Baitwa, the Co-Managing Director at Threeways Shipping Services (Group) Ltd, says slowed investment in Uganda’s oil and gas sector coupled with the delay to reach the Final Investment Decision (FID) affected the company’s cash flow, making it difficult to honour its financial obligations to StanChart.

He says when oil exploration kicked off in Uganda in 2007/8, Threeways Shipping Services was one of the first Ugandan companies to get involved in the sector.

“We offered logistics services for about 95% of the wells that were drilled. We created a reputation for ourselves in the oil and gas sector because we worked with most of the companies involved in exploring oil,” Baitwa says, adding: “When Total and CNOOC came in, we continued working with them.”

He however says from 2014, the oil and gas activities slowed down. “We thought this transition (from exploration to development and production) would take a short time but it didn’t happen until recently (February 2022 when FID was taken). By then, the company had invested heavily in equipment and staff. We were affected by the longer gestation period  from exploration to development and production and we were exposed,” he says.

Consequently, the company was placed under receivership in 2017. Kabiito Karamagi, the Managing Partner at Ligomarc Advocates, was the receiver.

A receivership is a court-appointed tool that can assist creditors in recovering funds in default and can help troubled companies avoid bankruptcy. Having a receivership in place makes it easier for a lender to obtain the funds that are owed to them if a borrower defaults on a loan.

Baitwa says the company started looking for partners/investors and that’s how Daniel Pettersson, the former country CEO for LafargeHolcim/ Hima Cement, and his investment team came on board.

“They invested in an initial investment of US$1.5m (5.6bn) to help us lift the receivership and participate in the oil and gas. They acquired a minority stake in the business and the receivership was lifted in 2019. It has been painful but we are moving. We won some valuable contracts; we are up and running,” Baitwa  says.

He explains that following difficulty to meet its payment plan, Threeways Shipping and Standard Chartered Bank reached a Consent Agreement in November 2018, where the outstanding amount was fixed to USD 3.7 million.

“In April 2019, Threeways Shipping and Standard Chartered Bank reached a Consent Variation Agreement based on a USD 1.5 million part-settlement payment towards the outstanding amount of USD 3.7 million. This left the outstanding balance to USD 2.2 million,” he says.

Daniel Pettersson, who is now a Co-Managing Director at Threeways Shipping Services (Group) Ltd, says it’s rare to see Ugandan owned businesses survive for over 20 years.

“This company (Threeways Shipping Services) has good history and reputation. That’s why we invested in it. Every Ugandan should be proud of this company and support it. We are not turning back. I believe we are going to be a regional leader in this space and we are here to stay,” Pettersson said in an interview with Business Focus.

He says they had plans to clear the StanChart debt, but due to the advent of COVID-19 in 2020, and the significant impact it had on

the general business environment, “the payment plan by Threeways Shipping to settle the outstanding amount of USD 2.2 million fell apart.”

The Namanve Land Sale and the Eviction of Property

He explains that despite a concrete offer from Threeways Shipping to reduce the outstanding loan amount further by USD 1 million, on 21st December 2020, Ligomarc Advocates, acting on behalf of Standard Chartered Bank, sold the Namanve Property, that was held as security, to the Mandela Group and recovered the outstanding amount.

However, the sale was challenged in court by Threeways Shipping, a court process that is still ongoing.

“It should be noted that this was done in a COVID-19-year contrary to instructions given by Government to banks to be lenient due to the extreme environment,” Pettersson says.

He further reveals that on the 31st of December 2020 – on New Year’s eve, Ligomarc Advocates issued Threeways Shipping with an eviction notice, giving Threeways Shipping only seven days to remove all its assets from the Namanve Land, which had been its operational site for many years.

“This eviction was also challenged in court by Threeways Shipping and the court process is still ongoing,” he says.

Threeways Shipping says the sale of the Namanve Land was triggered by Standard Chartered Bank, through

Ligomarc Advocates, without any involvement of the Uganda Revenue Authority (URA) in the process and Threeways Shipping’s assets, including some belonging to third parties, were evicted / transferred in January 2021 based on arrangements between Ligomarc Advocates and Liberty ICD.

“Threeways Shipping was not a party to these arrangements, and neither was any of the other Bro Group entities,” Pettersson says, disputing reports that the company owes money to Liberty ICD.

Tax Obligations

Baitwa says contrary to some media reports, Threeways Shipping Services doesn’t owe any outstanding tax arrears to URA.

He notes that there were distress warrants issued against the Bro Group’s three entities; Threeways Shipping, Threeways Distribution and Transtrac in 2021.

However, these were immediately suspended by URA itself upon the entities raising objections of the amounts owing to URA pending tax


“Today there are currently no active distress warrants – at least none that have been shared with Bro Group Ltd, Threeways Shipping, Threeways Distribution, or Transtrac,” Baitwa  says, adding: “Currently, Threeways Shipping has no outstanding overdue tax obligation with URA while Transtrac and Threeways Distribution both signed MOUs in July 2023 for the settlement of their outstanding tax obligations, based on amounts agreed with URA after lengthy reconciliation processes,” he says.

It’s understood that Transtac and Threeways Distribution owe URA a combined total of Shs780m in principal tax. In October, each of the companies is supposed to pay 130m.

“These MOUs are being honored; it is not possible to have MOUs

in place with the URA, that are being honored, and at the same time being embroiled in a distress process for the same outstandings,” Baitwa says, disputing false media reports.

He adds that the distress warrants issued in 2021 were linked to PAYE, income tax and VAT, and had nothing to do with taxes on imported goods.

“Those are the facts as of today. Threeways Shipping, which is the entity that entered into the loan arrangement with Standard Chartered Bank, does not have any outstanding tax obligations with URA. There is no distress warrant issued against Threeways Shipping and the sale of the Namanve Land and the subsequent eviction of assets from the Namanve Land was immediately challenged by Threeways Shipping in the court of law and there is

an ongoing court process to this fact; URA was never a party to this land sale, nor to the eviction,” he says.

Baitwa says the company is slowly returning to business.

“As we speak, we are paying about Shs400m in taxes to URA per month as Bro Group. We currently employ 150 people and this is set to grow. We are coming back stronger,” he says.

Lessons From StanChart Loan

Baitwa says Threeways Shipping Services had a good track record in as far as honouring its loan obligations is concerned until the StanChart loan acquired in 2015.

“You don’t borrow US$4.4m without a record; even borrowing US$100,000, banks can make you run up and down. Before the Standard Chartered Bank, our total borrowing amounted to USD15m in different facilities. That means they have earned another 7bn in interest. That track record was suddenly turned upside down because of one failure. If you fail, they blacklist you, you can go anywhere else,” Baitwa says with sadness written on his face.

He says most Ugandan companies borrow commercial debts which isn’t sustainable.

“There’s always a mismatch between commercial debt and long term plans. We need lenders (who are not there) that can give long term financing. There’s also a mismatch between borrowings and the plans that we have most of the time. In our case, commercial debts is also driven by the owners of the capital. Most of our debt was short term financing and we were unable to pay back the bank in that short term,” he says, adding: “Technically, the law is so strict against borrowers and there’s little room for remedy. When you run back to the bank and you want to restructure, they are no willing because the owners of the capital have a different opinion of the economy. Remember were were going into elections.”

He adds that although the company had grown so big ahead, the Ugandan economy is not straight forward in many aspects.

“What you see is not what you get sometimes. One has to be careful when making investment decisions. Someone is saying the economy is growing at 10% and it maybe true, but one will not tell you other things like inflation and the cost of borrowing. Sometimes interest rates are very high in Uganda. At the time (Threeways borrowed from StanChart), interest rates were about 28%,” he says.


Taddewo William Senyonyi
William is a seasoned business and finance journalist. He is also an agripreneur and a coffee enthusiast.

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