The bulk of the loan of more than $90 million is due to two institutions. Some $75.1 million is only due in August 2019 and is part of a $93 million loan obtained from China Development Bank while the company owes Ericsson Credit AB $15.2 million which is due in April next year.
Econet had to apply to its creditors to waive penalties for paying off its debt early, according to the circular.
“As the debt is being retired in full before its due date, lenders normally impose prepayment penalties because they will be deprived of the interest that would have been earned over the full term of the loan instrument,” Econet says.
“The Company has made an application for the waiver of these penalties and indications so far are that the request will be favourably considered by the lenders.”
This begs the question, if the lenders turn down the request, will the company have to pay penalties?
If so why pay the loans early when the loan from Ericson had a 4 .4 percent interest rate, that from China Development Bank 6.4 percent for the first loan and 5.7 percent for the second.
The Industrial Development Bank charged 6.4 percent while Afrexim Bank charged the highest interest of 9 percent.
The question therefore remains, could there be something that the company is not telling the public?