UTL CREDITORS’ AGONY…As Admin Sebatindira tells them…"No money to pay all of you"…defunct Teleco’s debt shoots to Shs972bn

The seed must die and be buried for it to grow into a beautiful plant, goes a common saying. Economists are now optimistic that Uganda Telecom Limited (UTL), which was a few years back allowed to die, buried in peace and then given time to resurrect—is now ready to compete for space in Uganda’s Telecom arena, if all signs with the help of the currently deployed PR machinery are to go by. And this time it will be trading as Uganda Telecommunications Corporation Ltd (UTCL) and 100 percent owned by the GoU of Uganda with Shs350bn as a purchase price after the sale of UTL assets.

BUT

By the time it was admitted on death bed, it had accumulated a lot of debts and creditors. These must be paid, no matter what or else it may again suffer a similar fate. And this is how the UTL administrator Ruth Sebatindira intends to clear them with optimism that everyone will be paid off by next year July. According to Sebatindira, recital C of the Administration deed acknowledged UTL’s estimated indebtedness in the sum of Shs709bn against an estimated assets value of Shs148bn. However, the verification process confirmed the Company’s indebtedness to be Shs972bn against the company’s assets value of Shs250bn.

It therefore follows that there was a likelihood that not all creditors would be settled in the event of a sale. Clause 5 (b) of the Administration Deed stipulates that distribution of the Sale proceeds would be in accordance with the Insolvency Act of Uganda. However, Clause 5(d) of the Deed also provided that settlement of Creditors’ claims would be made prorata in the event that the amounts realised were not sufficient to satisfy all Creditors’ claims in full.

In view of this contradiction, Sebatindira sought Court’s guidance and was directed by the High Court in Misc. Application No. 784 of 2020 (arising out of Misc. Cause 173 of 2019) to settle claims in accordance with the provisions of the Insolvency Act if the sums realised from the sale are insufficient to settle all creditors’ claims. Section 12 of the Insolvency Act provides for the settlement of the preferential claims if sums realised are insufficient to settle all Creditors’ claims.

These are: (a) Administrator’s costs, fees and expenses, including Trade Creditors, employee terminal benefits etc: (b) Secured Lenders: (c) National Social Security Fund claims, etc. Also, a peculiar and contentious claim emerged relating to a Pension claim against the Company, by ex-staff of Uganda Posts and Telecommunications Corporation (UP&TC) inherited by UTL under their Pension Scheme, Uganda Communications Employees’ Contributory Pension Scheme (UCECPS).

Sebatindira says she was directed by the High Court in Misc. Application No. 220 of 2020 (arising out of Misc. Cause 173 of 2017) to rank and treat all verified pension claims relating to UCECPS at the same ranking as National Social Security Fund under Section 12 of the Insolvency Act.

A Shareholder’s loan of approximately Shs250bn was filed as a claim against the Company by its majority Shareholder UCOM and its Parent Companies LAP GreenN and Libyan Post Telecommunications and Information Technology Holding Company (LIPTIC).

She also sought court directions on the ranking of this Shareholder loan. The court guided that the Shareholder’s loan be subordinated to the claims of other creditors’ claims.

WHO WILL GET WHAT

Therefore, in accordance with the provisions of the Act, the Deed and the Directions of the High Court of Uganda, proceeds realised from the sale of the Assets will be applied in this manner.

Shs 68.570.628.528 will go towards settlement of Administrator’s costs and expenses including Trade Creditors, Fees. Administration Taxes and Employee benefits. GOU has already released a sum of UGX 15,267,001,326 towards the settlement of these claims.

USD 11,650.000 will go towards settlement of Trade and Development Bank (TDB) loan, a claim that has been settled in full in accordance with the APA and TDB has released all the pledged/ mortgaged Assets.

USD 3.993,151.25 will be applied towards protection of a 9.13% UTL Shareholding in the West Indian Ocean Cable Company (WIOCC). This payment has already been made to WIOCC and UTL Shareholding is secured.

Shs16,311,992.461 will go towards settlement of unremitted contributions to the National Social Security Fund. This claim will be settled by the end of GOU FY 2022/2023.

Also 2.353.904.321 will go towards settlement of unremitted contributions to UCECPS. This claim will be settled by the end of GOU FY 2022/2023.

More so, Shs 165.048.246.917 will go towards the settlement of verified pension claims of ex-staffers of UP&TC. This claim will be settled by the end of GOU FY 2022/2023. According to Sebatindira, a portion of these funds (30%) have already been released by GOU and payments to qualifying claimants is currently being made under the supervision of the Ministry of Information Communications Technology and National Guidance and the Office of the Auditor General.

In addition to the above, the UTCL offer included the settlement of claims by Uganda Electricity Transmission Co. Ltd in the sum of UGX 3,399,302,267 and National Forestry Authority in the sum of UGX 1,208,068,148. Under the APA, these claims will be settled by the end of the GOU FY 2022/2023. Sebatindira has also made it clear that not all creditors’ claims will be paid as the proceeds realised from the sale of UTL assets are far less than the value of verified Creditors’ claims. She says each creditor will be able to avail a full report and be formally notified of the status of his/her claim. IN OUR NEXT PUBLICATION WE SHALL REVEAL UTL STAFF FACING AXE AFTER GoU TAKEOVER. GOT A HOT STORY? CALL/TEXT/WHATSAPP 0777959024 OR EMAIL: redpeppertips@gmail.com.