TransCentury Plc has extended the sale of its rights issue, aiming to raise Sh2 billion in new capital that was to close on Monday to February 3, indicating that the take-up may have been below expectation.
The cash call opened on December 29 and was to run until January 23, with the investment firm seeking to recapitalise the business and reduce debt.
“Upon request from some shareholders, the TransCentury Board has considered and agreed to extend the rights issue offer,” the company said in a statement on Tuesday.
“The company has received approval from the regulator on the same.”
The rights issue is testing investor faith in the company, which holds a negative equity position of Sh9.07 billion on the back of multi-year losses.
Proceeds from the rights issue will reduce its indebted shareholders like Kuramo Capital and other lenders, including Equity Bank.
The rights issue price was set at Sh1.1 per unit, representing a small discount on the share’s prevailing trading price of Sh1.3 at the Nairobi Securities Exchange (NSE) as of the close of trading on Monday.
Cash-strapped companies result to offer rights issues to raise capital by allowing existing shareholders to purchase new shares at a discount compared to the market trading price.
But in recent years, companies have avoided cash calls to raise new capital, reflecting the general decline in share prices at the bourse.
Since 2016, only Crown Paints rolled out a rights issue in 2021, compared to 15 such corporate actions between 2010 and 2016.
