Investment firm TransCentury engaged its main shareholder Kuramo Capital and other lenders including Equity Bank to restructure loans worth Sh5.2 billion after defaulting on the initial terms of the debt.
The company has disclosed details of the debt restructuring in an information memorandum published in connection with its rights issue that seeks to raise Sh2 billion.
“A shareholder of the company, Kuramo…agreed to subordinate all shareholder loans and signed amended terms for shareholder loans amounting to Sh1.9 billion on April 22, 2022, to extend the maturity of the loans to December 31, 2022,” TransCentury said.
“On September 2, 2022, the shareholder extended the subordination to September 30, 2023.”
TransCentury said Sh3.01 billion also became due to Equity Bank on December 31, 2020.
This comprised a default of Sh2.74 billion and Sh272.9 million, which was a long-term facility but was reclassified as payable in the wake of the default.
“The breach on the facility at the company level has not been remedied as at the date of approval of the financial statements,” said TransCentury of the Equity Bank loans.
“The company has, however, submitted a proposal to the bank on the planned remediation measures, which include a private placement with subsequent rights issue that shall be implemented in 2022.”
The Nairobi Securities Exchange-listed firm said a total of Sh299 million from SBM Bank Kenya also became payable from December 31, 2020.
This comprised a default of Sh17.5 million and Sh281.4 million, which was a long-term debt but which was reclassified as payable as a consequence of the default.
“The breach on the facility at the group level has not been remedied as of the date of approval of the financial statements,” said TransCentury.
“The group has made payments to regularise the facility and will continue to reduce the arrears with the expected improved cash flows from a robust order book.”
TransCentury published the information memorandum last month.
The company indicated that part of the loans from Equity Bank will be paid from the proceeds of the rights issue. Subsequently, the balance of the debt will be restructured into longer-term tenors to match cash flows.
The bank is also ready 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,” said the company.
“This process is expected to be completed following the conclusion of the rights issue process and is subject to the lender’s credit approval process.”
TransCentury’s rights issue, whose offer closed on Monday, seeks to raise Sh2 billion from the sale of 1.87 billion new shares for Sh1.1 each.
Kuramo, with a 25 percent stake in the company, has committed to investing up to Sh1.1 billion in the cash call.