Troubled TransCentury now seeks fresh capital
Tuesday May 08 2018
An aerial view of Masinga Hydroelectric Power Station, Kenya. Tanzania has turned to the AfDB to finance two of its major infrastructure projects — the 2,100 MW Stiegler’s Gorge hydroelectric plant and the modernisation of Dodoma Airport. FILE PHOTO | NATION
Regional investment firm TransCentury Ltd is in talks with shareholders for a possible injection of fresh capital to turn around the loss-making business weighed down by huge debts and poor performance of its subsidiaries.
The EastAfrican has learnt that the firm, which is listed on the Nairobi Securities Exchange is yet to come out of the woods despite bringing on an anchor shareholder and restructuring its bondholder debt in 2016.
“The firm wants to return to profitability and is engaging the anchor shareholder and minority shareholders to come up with a way to restructure the business.
“They are looking at all options including the possibility of injecting new capital into the business and to further restructure the debts they have,” an insider privy to the firm’s recovery plans told The EastAfrican.
When contacted, the firm’s management said they are reviewing the funding options of the firm, which would be communicated as per the regulatory guidelines.
“The company continues to review its capital needs and funding options and any decision to raise additional capital would be communicated to the public as per the requirements of the regulatory authorities,” said Phyllis Gachau, the firm’s head of communications.
Falling numbers
TransCentury’s stock on the Nairobi Securities Exchange (NSE) has fallen to as low as Ksh4.55 ($0.04) per share compared with its listing price of Ksh50 ($0.5) per share in 2011, wiping out almost all of the shareholders’ wealth.
In February this year a Kenyan court granted the firm’s former chief executive Gachao Kiuna a Ksh14 million ($140,000) payoff after suing the firm for his terminal benefits.
Dr Kiuna resigned from the firm in January 2016 following boardroom disagreements over the firm’s recapitalisation and repayment of an $80 million debt owed to bondholders.
He immediately sued the firm over unpaid terminal benefits amounting to Ksh21 million ($210,000).
Profit warning
TransCentury has already issued a profit warning that its full year financial performance for 2017 will be more than 25 per cent lower than that of 2016 and has also sought approval from the Capital Markets Authority (CMA) to delay announcing its results until mid June.
During the six months to June 30, 2017 the firm recorded a loss of Ksh1 billion ($10 million) compared with a loss of Ksh1.31 billion ($31.1 million) in the same period in 2016; while revenues declined by 28 per cent to Ksh2.99 billion ($29.9 million) from Ksh4.13 billion ($41.3 million) in the same period.
Its short term liabilities (current liabilities) stood at Ksh12.35 billion ($123.5 million) compared with current assets of Ksh5.17 billion ($51.7 million) implying the firm is facing difficulties meeting its short term obligations and financing the day-to-day operations of the business.
In 2016, the firm made a loss of Ksh863.89 million ($8.63 million) down from a loss of Ksh2.42 billion ($24.2 million) in 2015.
According to the firm’s chairman Shaka Kariuki, the uncertainties related to the firm’s resolution of the bondholder debt that was maturing in March 2016 led to a reactionary credit freeze to some of the businesses and inevitably worsening its working capital position and group-wide debt burden.
TransCentury has operations in Kenya, Uganda, Tanzania, Rwanda, Zambia, Mauritius, Democratic Republic of Congo and South Africa.