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TransCentury taps KPMG in Equity loan row
TransCentury’s engagement with KPMG forms part of the company’s strategies to resolve debt owed to Equity Bank with additional proposals including negotiations for an out-of-court settlement.
Investment firm TransCentury has tapped audit and consultancy firm KPMG as it seeks a plan to clear a Sh2.5 billion ($20 million) loan due to Equity Bank Kenya, and piling interest charges, amid a battle to avoid going under receivership over the defaulted facility.
The disclosure comes as court extended an order blocking Equity Bank’s appointed managers - George Weru and Muniu Thoithi from PwC- from acting as administrators of the firm and its sister company East African Cables.
High Court Judge Francis Gikonyo last week handed the two firms 90 days to settle arrears due to Equity or fall into the hands of the joint administrators.
TransCentury’s engagement with KPMG forms part of the company’s strategies to resolve debt owed to Equity Bank with additional proposals including negotiations for an out-of-court settlement.
“To address the issue of overdue loans, the Group and the Company have engaged KPMG to lead the debt restructuring discussions and engagement with Equity Bank, which is the main lender on the debt settlement plan,” TransCentury says in its latest annual report.
TransCentury says it is also working closely with Equity Bank to find an amicable resolution-‘preferably out-of-court’ and has offered resources to offset the arrears including dividends generated from its subsidiaries.
The company is further seeking a potential conversion of dollar-denominated debt facilities into Kenya shilling terms while it expects to mobilise at least Sh1.3 billion from the disposal of non-core assets including two land parcels in Nairobi and Mombasa, properties in Uganda, and machinery in Nairobi.
TransCentury’s Sh2.5 billion ($20 million) term loan with Equity Bank formed part of the company’s major liabilities as of December 2023 and was secured via corporate guarantees by Cable Holdings (Kenya) Limited and TC Mauritius Holdings Limited and the company’s shares in East Africa Cables Plc, Avery East Africa Limited and TC Mauritius Holdings Limited.
East Africa Cables Plc on its part has facility arrangements with Equity Bank Kenya Limited, Ecobank Kenya Limited, and SBM Bank Kenya Limited.
TransCentury expects the proposed debt restructure to allow it to generate cash flows to settle the arrears due to the lender.
“The group’s proposal entails significant reduction of the outstanding debt through partial disposal of non-core investments and non-core assets. This would allow the business to restructure the debt and allow the group and company to generate adequate cash flow to settle overdue debt service obligations over the medium term,” the company added.
Equity Bank issued a demand notice for Sh4.4 billion to TransCentury on June 8, 2023, and later appointed joint receivers over the affairs of TransCentury Plc.
The company however secured an injunction order suspending the appointment of the joint receivers. Equity Bank meanwhile lost a bid to set aside the injunctions.
