Infrastructure firm TransCentury Ltd (TCL) has struck a deal with a strategic investor to inject $20 million of fresh capital into the business as payment date of a $75 million convertible bond draws closer.
The funds from Kuramo Capital Management, an Africa-focused investment manager will be used to repay part of the $75 million debt owed to foreign investors that is maturing on March 25.
The transaction which was announced Tuesday is still subject to regulatory and shareholders’ approval.
In a statement, the firm said the funds realised from the strategic investor would be used to complement other funding options to settle the five-year debt.
No details were issued on the other funding options.
“Formal announcements including all relevant information on the entire process will be made at an appropriate time,” the company said in a public notice issued Tuesday.
TransCentury which is listed on the Nairobi Securities Exchange (NSE) is facing challenges repaying the debt secured by its Mauritius-based subsidiary, TC Mauritius (Holdings), in 2011.
Besides fresh capital other options open to the company include a rights issue, asset disposal or a bank loan. These, however, appear time-barred if no groundwork has already been covered behind the scenes, making restructuring the debt a likelier option.
TCL board’s reluctance to negotiate with the bondholders on how to repay the debt has caused stoked fears of default that would send confidence shocks in investment circles.
The board has also rejected ‘fair’ proposals from the bondholders aimed at resolving the deadlock including a combination of partial repayment, principal haircut, extension of maturity, and conversion of the debt to equity.
TransCentury’s major shareholders have also been reticent on converting the debt into equity for fear of dilution.