TCL has incurred finance costs of more than Sh1 billion annually in recent years, hurting its profitability and weakening its ability to fund new contracts.
The properties being sold include residential houses in Nairobi’s Lavington estate and Dar es Salaam, Tanzania. The properties have been leased to third parties.
TransCentury is selling properties valued at more than Sh700 million in Kenya and the regional market in a bid to raise funds to reduce its heavy debt load.
The investment firm has incurred finance costs of more than Sh1 billion annually in recent years, hurting its profitability and weakening its ability to fund new contracts.
The properties being sold include residential houses in Nairobi’s Lavington estate and Dar es Salaam, Tanzania. The properties have been leased to third parties.
The other assets on sale are buildings in Zambia’s Light Industrial Area and a plot of land in Nairobi’s Industrial Area.
“Despite the low activity in the property market, the group is still focused on disposing of its non-operating assets in order to improve liquidity and reduce the debt burden both at the group and in the operating units,” TransCentury says in its latest annual report.
“This process is geared towards achieving lean operations and is expected to generate cash flow to improve the working capital of the business thereby unlocking the value of excess assets in the operating units and improving return on capital deployed.”
TransCentury’s borrowings and finance costs stood at Sh11.1 billion and Sh1.5 billion respectively in the year ended December 2018, with interest on the credit facilities ranging from seven percent to 10.5 percent.
The debt includes a series of loans amounting to Sh699 million from the company’s controlling shareholder Kuramo Capital and Sh1.8 billion owed to bondholders.
The investment firm says it has already hired property agents to market and assist in sale of the properties.
TransCentury did not assign a value to the assets in the year ended December 2018 but their last reported fair value was Sh745 million the year before.
The company added that in addition to these properties, it is in the process of evaluating additional assets for disposal.
As part of the ongoing fundraising efforts, the investment firm says it raised Sh97.8 million from the sale of fixed assets last year, up from Sh46.2 million in 2017.
Besides reducing debt, the asset disposals will also help the company to generate cash to help fund the new contracts it has won.
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