TransCentury Plc’s major shareholder, Kuramo, has expressed interest in writing off part of its $10.5 million (Sh1.35 billion) loan to the regional infrastructure investment company as part of a strategy to jumpstart the struggling company.
The Nairobi Securities Exchange (NSE)-listed firm disclosed that Kuramo, which owns 74.06 percent shareholding in the company has expressed interest in ‘forgiving’ TransCentury of this debt.
“A shareholder of the company, Kuramo Africa Opportunity Kenyan Vehicle Ltd agreed to subordinate all shareholder loans and signed amended terms for shareholder loans amounting to $ 21 million (Sh2.7 billion) on February 8, 2024, to extend the maturity of the loans to December 31, 2025,” TransCentury disclosed in its latest audited financial statement for the 2023 financial year.
“The shareholder has also expressed the intent to forgive the company $ 10.5 million (Sh1.35 billion). Further, the group is in discussions with the shareholder to restructure the outstanding shareholder loans" it added.
TransCentury management said through an emailed response that restructuring of shareholder loans is carried out every year to support the company’s cash flow, growth, and continuity.
“TransCentury is a publicly traded company on the Nairobi Securities Exchange. As with many businesses, shareholder loans that are due may be restructured at the end of each financial year to support the company's cash flow, growth, and continuity. This approach remains consistent with our shareholders, as reflected in our 2023 annual report,” it said.
The financial statements are subject to approval by the company shareholders through an annual general meeting (AGM) scheduled for March 27, 2025. Shareholders will also approve re-election of group chairman Shaka Kariuki who retires by rotation.
“Notice is hereby given that the Twenty-Sixth (26th) Annual General Meeting of TransCentury Plc will be held via electronic means on Thursday, March 27, 2025 at 11 am East Africa Time,” the company says.
According to the report, Kuramo Capital advanced $19.38 million (Sh2.5 billion) in principal amount to TransCentury in the period 2018 to 2023 payable by December 31, 2023.
However, on February 8, 2024, the maturity date of all the shareholder loans was extended from December 31 2023 to December 31, 2025.
In 2017 and 2018, Kuramo Capital also advanced loans amounting to $ 7.62 million (Sh982.98 million) TC Mauritius Holdings Ltd-- a Mauritius-based subsidiary of TransCentury Ltd-- at an average interest rate of 5.2 percent.
The loan, which was payable in December 2021, was subordinated to be payable by December 31, 2024. TC Mauritius Holdings is a wholly owned subsidiary of the company.
The firm says it is exploring ways of restructuring its debt to allow the business time to recover and enable sustainable market development activities, revenue growth, and profitability.
The group incurred a loss of Sh 3.23 billion in the year ended December 31, 2023, widening from a loss of Sh2.77 billion in 2022. Records further show that as of December 31, 2023, the group’s current liabilities exceeded its current assets by Sh19.53 billion. In addition, the group’s total liabilities exceeded its total assets by Sh15.1 billion as of December 31, 2023.
However, the group recorded a net profit of Sh375 million for the six months ended June 30, 2024, from a net loss of Sh1.66 billion in the same period a year earlier.
In October last year, the commercial court in Nairobi blocked Equity Bank from putting TransCentury and its subsidiary East Africa Cables Ltd into administration over a Sh4.8 billion loan row.
“The directors are aware of the circumstances giving rise to a material uncertainty which may cast significant doubt about the Group’s and Company’s ability to continue as a going concern and have disclosed the Group and Company may be unable to realise their assets and discharge their liabilities in the normal course of business,” according to the financial statements.
TransCentury has tapped audit and consultancy firm KPMG as it seeks a plan to clear a Sh2.5 billion ($20 million) term loan due to Equity Bank Kenya and piling interest charges, amid a battle to avoid going under receivership over the defaulted facility.
“Consequently, the directors have made an assessment of the Group’s and Company’s ability to continue as a going concern and believe the Group and Company will be a going concern for at least the next twelve months from the date of this statement” it added.
The group’s total shareholder loans increased to Sh4.47 billion in 2023 from Sh3.59 billion in 2022.
The company’s operations span across five sectors including transport, energy, water, industrial, and agriculture.
Kuramo made the initial investment in TransCentury in 2017 through the acquisition of a 24.99 percent stake in a deal estimated at Sh2 billion.
In 2020 Transcentry announced that it needed to exit the NSE to access new capital from private equity funds that would only invest in it as a non-listed business but retreated from the plan a year later (2021) arguing it had found a better option of raising additional capital from the existing shareholders.
