Uganda’s struggling economy continues to swallow top companies, a move that is likely to make the already bad situation worse.
Spencon Services Ltd, Civil engineering and Construction Company is the latest to fall victim of the wobbly economy.
The heavily indebted company which is currently under receivership over has literally collapsed considering the fact that most of the assets of the company are up for sale.
Receivership is a type of corporate bankruptcy in which a receiver is appointed by bankruptcy courts or creditors to run the company. The receiver may be appointed by a bankruptcy court as a matter of private proceedings, or by a governing body. In most cases, the receiver is given ultimate decision-making powers and has full discretion in deciding how the received assets will be managed.
According to a statement issued by Kabiito Karamagi, Receiver/Manager and Donald Nyakairu, Receiver/ Manager of Spencon Services Ltd on Monday, a number of assets belonging Spencon Services Ltd including motor vehicles, road construction machinery, fabrication machinery, plumbing fittings, 10 acres of land, carpentry machinery, sanitary fittings, lab equipment, mechanical tools, ICT equipment, furniture, electrical fittings, motor vehicle spare parts and assorted scrap metal among other items.
“Prospective bidders may inspect the assets at the site office at Kawempe Tula and pick bid forms ….,” reads the statement, adding that deadline for receipt of bids is Monday April 24, 2017.
During the much publicised distressed companies that were seeking government bailout, it was reported that Spencon had partly become financially distressed because it was demanding billions of shillings from government. The government delayed to pay yet the company had to settle loan obligations from banks.
Other companies that have gone under due to the poorly performing economy include Crane Bank and WBS.
Steel Rolling Mills and Threeways Shipping Company have since been placed under receivership. Global regional brands that have quit the country in the last few months include AON, AIG and Uchumi.
Spencon was one of the leading civil engineering and construction companies in Uganda, specializing in water supply & sewerage systems, civil works including roads, bridges and buildings, and power and transmission lines.
Available information suggests that Spencon has undertaken more than 200 projects in some of the most difficult geographies including urban and rural Kenya, Uganda, Tanzania, Rwanda, Zambia, Malawi, Mozambique, and Southern Sudan.
Spencon Kenya also in Trouble
Spencon Uganda is not alone. It appears Spencon Holdings is in a financial squeeze so much that it may not survive the storm.
Spencon Kenya Limited was placed under receivership of PwC executives Kuria Muchiru and Muniu Thoithi effective December 8, 2016.
The company owes KCB Group KSh871.2 million
“With the appointment, the powers of the administrators extend to all assets and undertaking of the company,” a Kenya Gazette notice announcing the move read.
“By virtue of the administration, the powers of the directors of the company in terms of dealing with the company’s assets have ceased.”
The notice also called on the company’s creditors, including former employees, to file their claims with the administrators who were appointed under the Insolvency Act, 2015.
Spencon took a loan of KSh802.5 million from KCB in August 2008, with the debt secured by its directors’ personal guarantees and several properties.
The lender in May 2014 asked for the immediate repayment of the outstanding sum of KSh871.2 million, sparking a drawn-out legal battle pitting the lender against Spencon’s directors who later left the company after selling it.