TransCentury to double share capital at NSE

Corporate News

An NSE employee monitors the electronic trading on board. PHOTO | FILE 

By MUGAMBI MUTEGI, pmutegi@ke.nationmedia.com

In Summary

• TransCentury will on May 29 seek shareholders’ approval to increase its authorised shares to 1.2 billion from the current 600 million units.
• This will create shares to be allotted to existing shareholders who will buy the extra stocks at a price yet to be determined.
• The move is meant to raise money for a 2011 Eurobond maturing in March 2016.

Investment firm TransCentury is set to double its authorised share capital in preparation for a rights issue whose proceeds will be used to a repay $80 million (Sh7.5 billion) convertible Eurobond it issued in 2011.

The Nairobi Securities Exchange (NSE)-listed firm will during an annual general meeting (AGM) on May 29 seek shareholders’ approval to increase its authorised shares to 1.2 billion from the current 600 million units.

“The new shares rank parri passu (at the same rate) in all respects with the existing ordinary shares of the company,” TransCentury said in a notice ahead of the AGM.

Each of the authorised shares –existing and those to be created— has a par value of Sh0.5.

The move will create enough shares to be allotted to existing shareholders who will buy the extra stocks at a price yet to be determined.

TransCentury has so far issued 280.2 million shares held by 1, 545 investors, representing 47 per cent of the 600 million authorised units.

Analysts see the cash call as the only feasible option of raising funds to retire the dollar-denominated bond which matures on March 25, 2016.

Standard Investment Bank (SIB) has noted that debt conversion into equity is unlikely because of the firm’s depressed share price and weakening of the shilling against the dollar

Converting the debt into equity would have eased pressure on TransCentury which closed 2014 with a negative cash flow of Sh454.7 million, with most of its assets held in the form of property, equipment and receivables.

READ: TransCentury lines up right issue to pay Sh7.5bn Eurobond

The firm’s stock has dropped to lows of Sh16, about a third of its listing price of Sh50. The cash call will see shareholders pump in nearly double the company’s current market capitalisation of Sh4.5 billion and will see investors who sit out the rights issue facing significant dilution.

Details of the upcoming rights issue, including the expected gross proceeds and pricing of the new shares, are expected to be published after approval of the increase in the share capital.

The AGM notice also announced that two TransCentury directors and founders Mr Ngugi Kiuna and Njeru Kirira are stepping down from the board.

The two are retiring by rotation and have not offered themselves for re-election. It was not immediately clear why the long-serving directors have chosen to retire.

Mr Kirira owns a 3.3 per cent stake in the investment firm, ranking as the tenth largest local individual investor in the company.