Investment firm TransCentury and its sister company East African Cables have been handed a reprieve after a judge extended an order preventing the managers appointed by Equity Bank from acting as administrators of the two firms.
High Court judge Francis Gikonyo extended the order blocking George Weru and Muniu Thoithi from acting as receivers of the two firms for a period of 90 days from the date of the ruling.
The judge said if the two troubled firms would not have repaid the debt at the expiry of the three months, Equity Bank would be free to exercise its right to enforce the securities and appoint the administrators.
“Accordingly, I am persuaded that there is a sufficient reason for a review of the orders of October 18, 2024, through an extension of the timeline required for compliance. I opine that an extension of 90 days presents a lesser injustice in the circumstances,” said the judge.
Justice Gikonyo said as a trading company, the cable manufacturer should continue making payments towards settlement of the debt while seeking financiers.
The lender placed the two firms under receivership after declining a request to write off over Sh2.8 billion debt owed by TransCentury and another Sh1.948 billion owed by its subsidiary EA Cables.
A High Court judge had blocked the receiver managers from taking over the management of the company for a period of 120 days, which TransCentury sought an extension stating that there were prospects of getting financiers.
Through lawyer Philip Nyachoti, the investment firm said there were efforts made by various financiers to liquidate the outstanding debt.
Mr Nyachori stated TransCentury was a holding company and it is sourcing funds for all its subsidiaries, including EA Cables.
The lawyer denied claims that the company went to slumber after getting interim orders in June 2023.
According to Mr Nyachoti, TLG Africa Growth Impact Fund Corporate Management Solutions (Cayman) Limited registered in the Cayman Islands, United Kingdom, had agreed to raise funds to liquidate the entire outstanding debt of EA Cables and TransCentury.
He added that the firm could not meet the 120 days’ timeline given to settle the debt due to the large sums of money involved, the complexity of the transaction, and delays due to the Christmas holidays.
The investment firm further tabled evidence showing that it made efforts to settle the debt, including a non-binding head of terms dated January 13, 2025, for debt financing of $8 million offered by TLG.
In yet another letter, TLG expressed its commitment to providing financial support to TransCentury and indicated that it was actively working with Kuramo Capital to finalise the provision of a debt facility that would allow for the refinancing of the debt and contribute to the stabilisation of the company’s financial position.
Equity Bank through senior counsel Kiragu Kimani opposed the extension, arguing that the conduct of the investment firm was indicative of a deliberate attempt to abuse the court process.
Mr Kimani submitted that TLG, which was undertaking due diligence, had not confirmed that it will finance TransCentury.
Regarding the efforts to raise the outstanding debt through sale of shares and property, Mr Kimani confirmed that the lender was aware of the proposal to sell 51 percent of the shares of EA Cables (Tanzania) Limited to Msufini Limited, which was not concluded.
However, that payment would only settle part of the outstanding sum and not even cover the arrears of Sh919 million.
Mr Kimani added that the company had not honoured its obligation to pay monthly instalments of Sh27.4 million towards the repayment of the advanced credit facilities.
He said since October 18, 2024, the firm had not communicated any proposals to settle the outstanding debt, which stood at Sh2.25 billion as of January 7, 2025.
Justice Gikonyo said bank statements showed that EA Cables had paid Sh16.1 million between February 25 and March 5, 2025.
“This indicates good faith by the plaintiff in making the repayments. The plaintiff has also demonstrated that the negotiations with TLG are on course and due diligence is underway,” said the judge.
