We discussed Liquid Intelligent Technologies facing some financial challenges. The company recently had its credit rating downgraded by two of the largest credit agencies in the world.
The company is saddled with debt amounting to US$930.6 million, and some of that debt is due soon. Bloomberg reports that there is a $156 million loan due in 2026. This was previously reported as $179 million earlier this month, which could indicate that part of it has been repaid. This loan repayment is due in March 2026.
Additionally, there are $620 million in bonds due that same year. That’s a significant amount of debt payable in a short period.
We discussed what Liquid could do to navigate this situation. Fitch Ratings suggests they could work on refinancing the debt (negotiating the terms of the loans).
However, Fitch highlighted that any refinancing efforts would likely depend on Liquid securing external funding, among other factors. Liquid is working on it.
Liquid to raise $225 million
According to Liquid CEO Hardy Pemhiwa, the company seeks to raise $225 million in equity by the end of 2024.
Remember, equity refers to capital raised by selling shares or ownership in Liquid. In simpler terms, it’s a way for the company to generate funds without taking on additional debt by bringing in new shareholders who contribute capital in exchange for a stake in the company.
Out of that $225 million, Liquid expects to secure about $90 million in the next few weeks. The Liquid CEO first mentioned the $90 million back in June 2024.
US government agency investing in Liquid
The United States International Development Finance Corporation (DFC) will be one of the main investors, according to Pemhiwa.
The DFC will be a significant participant in the first $90 million and will also be involved in further funding rounds.
The DFC is a development finance institution and an agency of the United States federal government. It invests in development projects primarily in lower- and middle-income countries.
It “partners with the private sector to finance solutions to the most critical challenges facing the developing world.”
The DFC has invested billions in the developing world. The DFC reports having financial investments, loans, guarantees, or other financial commitments totaling $41 billion across its portfolio in 112 countries.
That may be, but it’s not every day we hear about the U.S. government investing in African companies with Zimbabwean connections. So, it is a big deal.
Some speculate that this investment is influenced by the geopolitical competition between the U.S. and China.
The U.S. and China are competing for influence in Africa, driven by Africa’s growing population and its rich mineral resources, which are valuable for global supply chains, especially in technology and energy sectors.
The DFC is one of the tools the U.S. uses to engage economically with African countries. By providing financial support, investments, and development projects, the DFC helps the U.S. establish and strengthen economic ties with African nations, countering China’s influence in the region.
How to spend $225m
Returning to the $225 million that Liquid is looking to raise, not all of it will be used to repay the loans we discussed.
Liquid has several projects in the pipeline. Pemhiwa mentioned a few as reported by Bloomberg:
- Liquid is collaborating with Microsoft and Google on broadband projects in East Africa.
- The project with Microsoft focuses on delivering affordable broadband to 20 million people in Kenya and Zambia through last-mile connections.
- Liquid will partner with Google to expand terrestrial fibre networks across South Africa, Kenya, Uganda, Rwanda, Zambia, Zimbabwe, and the Democratic Republic of Congo.
- This fibre route will connect multiple data centres and offer an alternative pathway for internet traffic in case of a subsea cable outage between South Africa and Kenya.
I also imagine that projects like the private 5G network in partnership with Globalstar will be funded as well.
So, the $225 million will help fund these projects and also go towards repaying or refinancing the looming loan and bond repayments.
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