Cell C’s landlord Attacq’s outcomes for the six-month interval ending 31 December 2022 revealed that it expects R31.1 million of Cell C’s excellent lease to not be recovered.
Cell C rents its campus from Attacq, an actual property funding belief (REIT), and has been struggling to pay its lease due to monetary difficulties.
The Cell C campus consisted of three buildings, together with a walk-in centre (4921 sq. metres), a collaboration hub (24,955 sq. metres), and a warehouse (41,014 sq. metres).
Attacq and Cell C amended their lease settlement in 2022 in gentle of Cell C’s debt recapitalisation.
With the renewed lease settlement, Cell C solely proceed to lease the collaboration hub. New tenants will occupy the walk-in centre and warehouse.
Attacq informed Every day Investor that it entered right into a contractual settlement with Cell C to recuperate excellent lease. The settlement is for R64 million.
The cash can be paid to Attacq in two bullet funds due in 2024 and 2026. The excellent lease would additionally carry 6% curiosity.
The fee in 2024 pertains to all excellent lease from Cell C generated earlier than its recapitalisation. The 2026 fee pertains to all excellent lease after the recapitalisation.
Attacq additionally indicated that it had obtained a money fee from Cell C for extra excellent lease, which was not included within the R64 million.
Nevertheless, Attacq doesn’t count on to recuperate the full R64 million because it elevated its anticipated credit score loss from Cell C to R31.1 million.
An anticipated credit score loss is commerce receivables not anticipated to be recovered.
It ought to be famous that Attacq didn’t write off the R31.1 million. It means it’s going to nonetheless attempt to recuperate it, however it’s recorded as a provision within the monetary statements because the likelihood of restoration is low.
Attacq’s issues with Cell C stem from the cell operator’s main monetary difficulties in recent times.
Cell C defaulted on its debt and was compelled to chop employees and cease paying many suppliers, which included its landlord.
To deal with Cell C’s dismal monetary place, it underwent a recapitalisation course of to considerably minimize its R7.3 billion debt burden.
It did this by providing its collectors 20c for each rand Cell C owed, decreasing its debt burden to R1.46 billion.
The R1.46 billion is financed by its largest shareholder, Blue Label Telecoms, which elevated its shareholding in Cell C to 49.3% following the recapitalisation.
This text was first printed by Every day Investor and is republished with permission.