Infrastructure development firm TransCentury #ticker:TCL has sunk into a negative capital of Sh112 million in the year ended December after deep losses wiped out its assets, pushing the company into an emergency fundraising.
The capital depletion means shareholders will not get a cent if the company was to be liquidated today to pay off creditors. Equity Bank #ticker:EQTY is one of the largest lenders to the company, according to the firm’s most recent disclosures.
TransCentury’s shares, however, traded at a premium of Sh4.2 per share on the Nairobi Securities Exchange Monday, assigning the company a market value of Sh1.5 billion.
Private equity firm Kuramo Capital, which acquired a 25 per cent stake in TransCentury in 2016 for Sh2 billion as a turnaround investment, is among those counting major paper losses from the company’s weaker performance.
TransCentury’s share price has dropped 91.6 per cent from the 2011 listing price of Sh50 per share, hurting long-term investors.
The company joins Uchumi Supermarkets and Home Afrika among publicly traded firms whose liabilities have exceeded their assets.
TransCentury ended the previous year with a net worth of Sh3.8 billion, underlining the impact of the losses.
Its net loss rose more than eight times to Sh3.5 billion in the review period compared to Sh440.1 million the year before, weighed down by reduced sales and a Sh1.5 billion contract liability expense among other headwinds.
The company says it has embarked on a fundraising besides restructuring its loans as part of its survival plans.
“The board has approved the commencement of a process to raise additional capital and appropriate information will be availed in line with relevant regulatory guidelines,” said TransCentury in a statement.
The company has already received a shareholder loan of Sh388 million, most likely provided by Kuramo which is currently the anchor investor after the founders’ stakes dropped from a mix of share sales and dilution.
Founded by some of Kenya’s most high profile businessmen including investment banker Jimnah Mbaru and Eddy Njoroge, TransCentury hit headwinds after defaulting on a Sh6 billion loan it had taken shortly before listing on the Nairobi Securities Exchange.