Centum #ticker:CTUM subsidiary Two Rivers Development Limited (TRDL) will sell a stake by April to raise new capital and cut debt.
Centum CEO officer James Mworia said the firm has entered talks with several investors interested in taking up a stake in the subsidiary.
The company is still determining the structure the deal will take, which depending on the valuation agreed with the investors could be in form of a straight equity sale or a convertible instrument.
Centum's shareholding may or may not be diluted, depending on how the transaction will be structured.
He, however, declined to disclose the size of stake Centum is looking to sell and the amount they hope to raise, although he had earlier said the proceeds would help retire some of the debt held by TRDL.
“There is investor interest in TRDL because the development rights in the company is entirely serviced with infrastructure and we have been able to validate three different development models ranging from high-end, medium-income and affordable housing,” said Mr Mworia.
“We are engaging with several investors and will hopefully close soon. The target holding post-deal depends on the valuation we agree on and structure, which might either come in as straight equity or a convertible facility. In the next three or four months, we should have a signed agreement.”
Centum currently owns 58 percent of TRDL, with AVIC International holding 39 percent and Kenya Development Corporation three percent.
TRDL in turn holds a 50 percent stake in Two Rivers Lifestyle Centre, which owns the mall and office tower, with Old Mutual Properties owning the other half. Therefore, Centum has an effective stake of 29 percent in the mall and tower complex.
The success of the proposed equity sale deal will therefore dilute Centum’s ownership in both the mall and surrounding housing and land rights developments.
Last month, Centum also said that TRLC would convert a Sh4.5 billion loan into a security that will see an undisclosed lender earn dividends and get a share of the shopping complex if the owners decide to sell it, in a plan to reduce interest expenses.
The debt was part of $96 million (Sh10.89 billion) secured during the construction of shopping and office complex. The disposal of part of its ownership in TRDL is among several transactions Centum has lined up to raise cash and monetize a section of its assets.