TransCentury fights off broke tag, says will pay Sh10b loan by March

TransCentury has fought off claims it would be unable to repay a $100 million (Sh10.2 billion) loan, helping its shares post modest recovery yesterday.

The investment firm listed at the Nairobi Securities Exchange (NSE said in a statement yesterday that it was confident it would be able to raise the required funds through its subsidiary, TC Mauritius).

“In particular, the Board is confident that an agreement to settle the TC Mauritius Senior Unsecured Convertible Bond will be secured in the very near future, and in any event, before maturity,” the company, which is associated with several wealthy businessmen, said.

Anxious Days

The firm protested the recent media coverage of its financial woes, terming it as bent on painting a negative picture of the company.

“... the Board of Directors wish to assure shareholders that the company and its wholly owned Mauritian subsidiary, TC Mauritius Holding Limited, continue to implement the ongoing fundraising programme.”

At the close of trading yesterday, the company’s shares had risen over 4 per cent to Sh5.95, putting its worth at Sh1.66 billion.

But it is that valuation when compared to the loan it has, which falls due in mid-March, that has been the cause of concern for investors.

Yesterday’s assurance that it could repay the loan comes as a major relief for current and prospective shareholders who have endured anxious days as the maturity date of a loan taken out five years draws closer.

Shareholders’ fortunes were complicated by a sharp drop in the investment firm’s valuation, following a sustained bear run at the stock market.

TransCentury, which fired its long-serving CEO Gachau Kiuna last month following massive losses disclosed in its financial statement, added that all information relating to the ongoing fundraising would be shared at the “appropriate time”.

“As indicated previously, the process remains subject to applicable legal and regulatory approvals including the approval of TransCentury shareholders and the Capital Markets Authority.”

Considering that the due date for settling the loan is only four weeks away, an urgent extraordinary general meeting could be called within days to seek approval for the fundraising. The timing also eliminates any chance of raising the funds through a rights issue — which is a lengthy and complicated procedure.

Difficult Options

A realistic prospect could be reviewing the terms of the loan to give the investment firm more time to repay it, or for the directors to find new lenders to buy out the loan.

Some analysts had outlined the difficult options the company could explore, citing a default on the loan as the most realistic but most costly decision.

TransCentury had hoped to raise the cash through a rights issue with a tentative date of December 2015, only to be put off amid declining investor sentiment.

The investment firm had taken out the loan to invest in subsidiaries operating in various sectors, including construction, energy and transport.

Most of the investments have, however, not performed as anticipated, either returning losses or have longer turnarounds than expected.

Among its subsidiaries is Avery East Africa, which last week announced it had won exclusive distribution rights for a pothole-repair technology.