A Angola Cables, one of the stars of the telecommunications sector was, on December 31, 2021, in default with the payment of interest and amortization to a financing of almost 300 million USD from the Development Bank of Angola (BDA), warned the external auditor of the banking institution's 2021 accounts, according to the newspaper Expansão in its edition of Friday, July 08 of the current year.
According to the same newspaper, the issue of non-compliance and its impact on the BDA's financial statements deserved a reservation from the auditor of the bank's accounts, consultant Bakertilly, who also warns that Angola Cables was in technical bankruptcy at the end of 2020.
This reality, associated with the accumulated losses during the last financial years, makes Angola Cables in need of a capital increase. As Expansão found, since 2019 the company that owns the submarine cable that connects Angola and Brazil has been considering the possibility of carrying out a capital increase and restructuring the credit obtained from that bank with public capital.
According to the Angolan weekly, bad strategic choices led the company to go into debt and enter into default with the Development Bank of Angola (BDA). Continuity of operations depends on a capital increase but the Angola Telecom, the main shareholder with 51%, is also in technical bankruptcy.
In 2018 alone, the year in which the company should have started paying the loan to the BDA, the losses exceeded 4,6 billion Kz and, on July 30, 2020, equity was negative at 47.734.440 billion Kz. The accumulated loss between 2013 and 2018, although positive exercises were recorded in 2015, 2016 and 2017, approached Kz 5 billion.
"Part of the outstanding credit (85,927 thousand million Kz) was financed by an external entity, having been granted a guarantee that covers the entire credit (260 million USD) by the Angolan State in favor of the BDA under the terms of Presidential Order n. 23/16 of February 20", declares consultant Bakertilly in the BDA's 2021 report and accounts.
The auditors explain in the document that “as a result of a review of the strategic and business plan", Angola Cables "requested a restructuring of that credit with a relevant reduction in the interest rate, a capital grace period and a significant increase in the repayment period, which is under analysis by the BDA".
The negotiation and restructuring process was approved in July 2021 by the Ministry of Finance, according to the independent auditor, but those circumstances, “as well as the size of the credit", involve a "significant risk as to the capacity and time when the reimbursement will occur, and it is not possible at the current date to estimate the possible impact of this situation on the financial statements of BDA on December 31, 2021".
The situation of technical bankruptcy left Angola Cables unable to pay the financing to the BDA, at the same time that the continuity of the company's activities is at risk. The shareholder structure remains distributed as follows: Angola Telecom (also in technical bankruptcy in 2020) owns 51%, Unitel 31%, MSTelcom 9%, Movicel 6% and Startel 3%, i.e. the The State directly and indirectly controls more than 90% of the capital of Angola Cables.
