TransCentury seeks to calm Sh8.1bn bond holders after CEO exit
Dr Gachao Kiuna, former TransCentury CEO. PHOTO | FILE
What you need to know:
Dr Kiuna left the investment firm last Thursday followed by Joe Karago, a non-executive director, who resigned the next day.
TransCentury has moved to assure investors that it is on course to repaying Sh8.1 billion owed to bondholders despite the sudden resignation of its CEO Gachao Kiuna last week.
Dr Kiuna left the investment firm last Thursday followed by Joe Karago, a non-executive director, who resigned the next day.
The company did not explain why the duo stepped down but says it is working on settling the convertible debt, which matures on March 25.
“The fundraising process is ongoing with one of the key objectives being to clear the Eurobond by due date. Details will be released in the next couple of weeks,” said TransCentury in a response to queries by the Business Daily.
It did not elaborate on the mode of fundraising being used.
The company is believed to be looking at various options, including a rights issue and taking on new debt.
Going for a rights issue means TransCentury will be asking shareholders to pump in over three times its market capitalisation of Sh2.5 billion, heralding a significant dilution.
A cash call would test investors’ appetite for the stock that has lost 82 per cent since listing in 2011 at an offer price of Sh50.
The debt repayment process is now being spearheaded by Ng’ang’a Njiinu, currently the firm’s head of corporate finance, who was appointed to replace Dr Kiuna who held the CEO’s position for eight years.
TransCentury issued the Eurobond in 2011 ahead of its listing the same year, disclosing that it would invest Sh2.2 billion out of the total proceeds to acquire a 34 per cent stake in Rift Valley Railways (RVR).
While the original dollar-denominated debt was Sh6 billion, the weakening of the shilling has inflated the outstanding loan to the current level.
The firm disposed of its RVR stake in March 2014 for Sh3.78 billion, which it said represented its entire cash investment in the railway concessionaire.
The transaction saw it book a paper loss of Sh1 billion.
TransCentury was also to invest Sh3.8 billion in other projects in the power and transport sectors.
The bond is expected to be repaid in cash as the company’s share price has fallen significantly below the pre-set conversion target.
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