TransCentury is open to an out-of-court negotiated settlement in its tussle with Equity Bank over a Sh1.5 billion debt, chairman Shaka Kariuki has said.
Mr Kariuki told shareholders during the annual general meeting (AGM) that the firm has repaid over Sh600 million of its debt and continues to make monthly repayments.
In 2019, East African Cables refinanced its Sh1.5 billion debt that was previously held by Standard Chartered Bank. Equity Bank Kenya offered to take it over and restructure the debt under what Kariuki said were “attractive terms”.
“Indeed, the takeover of the loan included a commitment to fund the company’s working capital to the tune of Sh1 billion. Unfortunately, this commitment was never honoured by the bank, severely affecting the business performance. To date, despite constraints in accessing working capital, East African Cables has repaid over Sh600 million and continues to make monthly repayments,” he told shareholders during the company’s annual general meeting.
“In essence, the loan continues to be actively serviced, confirming that our commitment is to meet all our obligations.”
TransCentury has been engaging lenders in a bid to restructure its debt after hitting a rough patch, he noted.
Mr Kariuki told shareholders that the firm was in “active engagement with (Equity Bank) as recently as a day before” the lender tried to place the company under receivership.
The High Court however slammed the brakes on the matter through an injunction. “Given that this is a matter before the court at the moment, I will restrain myself from canvassing the issue in this public forum. My position as chairman, director and shareholder of this business, however, accords me a fiduciary duty to update you as a shareholder and stakeholder on the matter at hand while providing a context. This, I will do within the limits of the legal fence around me to stay within the sub judice rules,” he said.
Kariuki said TransCentury provided Equity Bank with a detailed payment plan, adding that the company placed reliance on the progress made in the talks and “understood that an amicable agreement was imminent”.
“Therefore, the appointment of the administrator and consequent publishing of the notice in the dailies was contrary to the spirit of the discussions and our long-standing partnership that we’ve had with the bank. This action had the potential to undermine the significant progress the group has made,” he said.
Kariuki said the firm was pursuing all legal avenues to reach an amicable resolution, including going back to the negotiation table with the bank. “In our quest and commitment to safeguarding shareholder value, we will spare no resource or effort to ensure that justice is done on this matter. We will defend with all our might the right for Transcentury to operate legally and within the confines of good corporate governance,” he assured shareholders.