Companies

TransCentury delays Sh2.4bn loan payments in deal with banks

TCL

TransCentury Limited board chairman Shaka Kariuki. PHOTO | SALATON NJAU | NMG

Investment firm TransCentury #ticker:TCL has pushed forward the repayment of Sh2.4 billion loans after renegotiating the debt with banks to ease pressure on its cash flows.

The Nairobi Securities Exchange-listed firm and its subsidiaries have borrowed nearly Sh5 billion from local and regional lenders, including Equity Bank #ticker:EQTY, Chase Bank and Standard Chartered Bank (Tanzania).

Interest on the loans ranges between six per cent and 14 per cent. Nearly half of the debt was to mature last year when TransCentury faced redemption of a separate Sh8 billion debt in the form of a convertible bond, with the company reaching an agreement with the banks to settle the loans this year.

“During the year, the company and its subsidiaries renegotiated with its lenders to extended repayment of borrowings amounting to Sh2.4 billion which were initially due in 2016, to be repaid in 2017,” TransCentury says in its latest annual report.

The firm’s biggest creditor is Equity Bank, which has provided the investment firm and its subsidiaries with $31 million (Sh3.1 billion). The debt, with an interest of 8.5 per cent, is secured by TransCentury’s assets.

The investment firm says it is focused on optimising its capital structure, a strategy that will involve further renegotiations of the short term debt and additional fundraising including disposal of non-core assets.

“The group is exploring ways of optimising its capital structure which could involve raising of additional funds and restructuring of current debt,” the company said in the report.

“This process will aim at further strengthening the balance sheet of the group and achievement of the growth strategy.” Raising extra funds could see the company sell new shares to existing and prospective shareholders.

TransCentury last year received Sh2 billion from private equity firm Kuramo Capital which was allotted a 25 per cent equity in the company. The debt was used to settle part of its corporate bond, the balance of which was turned into a three-year loan.

READ: TransCentury gives new PE fund shareholder power to fire CEO

The company is also set to raise Sh245 million from sale of a residential property it owns in Tanzania as part of plans to dispose of non-operating assets.

“The exercise is geared towards achieving lean operations and releasing funds which could be deployed towards more profitable ventures,” TransCentury said.