TransCentury, an investment firm, is working with its major shareholder Kuramo Capital and other creditors, including Equity Bank, to reorganize loans totalling KES 5.2 billion after failing to meet the original terms of the debt.
Trancentury shared information about the debt restructuring in a document called an information memorandum related to its plan to raise KES 2 billion through a rights issue.
The investment company stated that a company shareholder, Kuramo, agreed to move the priority of all shareholder loans and signed new conditions for loans totalling KES 1.9 billion on April 22, 2022, to extend the due date of the loans until December 31, 2022.
On September 2, 2022, the shareholder extended this subordination until September 30, 2023. Furthermore, TransCentury added that KES 3.01 billion became due to Equity Bank on December 31, 2020.
The Nairobi Securities Exchange-listed firm reported defaulting on loans from Equity Bank and SBM Bank Kenya, totalling KES 2.74 billion and KES 299 million, respectively.
The loans, classified initially as long-term facilities, have been reclassified as payable due to defaults.
TransCentury had submitted a proposal to Equity Bank for planned remediation measures, which included a private placement and rights issue to be implemented in 2022, and has made payments to regularize the SBM Bank Kenya facility, with plans to reduce arrears with improved cash flows from their complete order book.
The company also indicated that the loans from Equity Bank would be partially paid from the rights issue proceeds, and the remaining debt would be restructured into longer-term tenors to match cash flows. The bank has also agreed to help TransCentury with its working capital needs.
The working capital funding, dependent on the successful completion of the rights issue, will be in the form of a non-funded facility for issuance of letters of credit to suppliers of raw materials, TransCentury added.
The completion of TransCentury’s rights issue, which aims to raise KES 2 billion from the sale of new shares, depends on the lender’s credit approval and is set to occur after the rights issue process is finished.
Kuramo, a shareholder with a 25% stake in the company, has pledged to invest up to KES 1.1 billion.