TransCentury #ticker:TCL has taken additional loans of Sh311 million from its main shareholder Kuramo Capital, raising its indebtedness to the private equity firm to Sh699 million.
The Nairobi Securities Exchange-listed company first took a series of dollar-denominated loans from Kuramo worth Sh388 million in 2017.
Kuramo subsequently gave TransCentury two additional loans totalling Sh311 million in February and November last year, according to disclosures in the investment firm’s latest annual report.
The first batch of loans was scheduled to be repaid last year but their maturity date has been extended to June 2020 – when TransCentury is now required to settle all the Kuramo debt.
TransCentury says the shareholder loans were used to pay part of its outstanding dollar-denominated corporate bond it issued in 2011 and on which it incurs an interest rate of eight percent.
The company paid bondholders Sh253 million in the year ended December when the balance on the bond stood at Sh1.8 billion.
The Kuramo loans are priced at an effective interest rate of seven percent. The debt is secured by shares in TransCentury’s subsidiaries, including 56.7 million shares of East African Cables.
Besides taking new loans from its controlling shareholder, the investment firm also recently received a discount of more than Sh1.5 billion when its subsidiaries repaid loans it owed the Kenyan and Tanzanian branches of Standard Chartered Bank #ticker:SCBK.
TransCentury says it is also selling assets and raising new capital to further reduce its debt burden and fund its working capital, adding that it has won new contracts in its infrastructure and transport divisions.