Transcorp Hotels, poised to benefit from Heirs Holding $100m Afrexim Facility

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Heirs Holding Ltd, the investing vehicle owned by Nigerian Billionaire, Tony Elumelu last week reported that it had secured a $100 million facility from AfreximBank. The loan agreement was signed in Kigali Rwanda. The loan according to AfreximBank will help it support its cross border investment programme.

What could Heirs do with it?

  • As part of Mr Elumelu’s Africapitalism mantra, Heirs Holdings Ltd has portfolio investments in about 20 African countries spanning energy, financial services, real estate and hospitality.
  • However, one area that could desperately require this loan is its hospitality business.
  • Transcorp Hotels Plc, its hospitality arm currently caries a debt of about N19.7 billion most of which it borrowed via a local bond issue in 2015.
  • The bond issue are for a 7 year fixed term and priced at between 15-16% per annum. Whilst there is not much pressure to repay the loans, a cheaper AfreximBank loan could come in handy.
  • Another option might be to finance other real estate projects lined up by Heirs Holdings. Afriland Properties a subsidiary of Heirs Holding Ltd could also utilize the loans to fund several of its pipeline real estate projects.
  • Whilst Afriland remains a plausible option, insiders suggest Transcorp projects in Ikoyi, which has stalled since the economic crisis, could be the destination for the Afrexim Loan.
  • The project is said to have stalled due to cost escalations making the project unprofitable if funded with local debt. A status the AfreximBank loan could soon change.

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