Corporate News
TransCentury chairman Zeph Mbugua. PHOTO | FILE
By MUGAMBI MUTEGI, pmutegi@ke.nationmedia.com
In Summary
TransCentury
has reached a settlement with its bondholders halving its principal
debt to $40 million (Sh4.04 billion) in unclear circumstances, just two
days before the bond’s maturity date.
Following last weeks’ equity injection of $20 million
(Sh2.02 billion) by South Africa’s Kuramo Capital, an investment
manager, TransCentury’s outstanding debt is now down to a similar
amount.
The investment firm, which is listed at the Nairobi
Securities Exchange, says it is in the “process of raising the balance”
and that its “bondholders are comfortable with the structure in place
to retire the outstanding total agreed debt.”
The process remains subject to regulatory
approvals, including the approval of the Capital Markets Authority and
shareholders where applicable, TransCentury noted in a statement sent to
newsrooms late Wednesday night.
“This agreement validates the confidence Kuramo and
other investors have in TransCentury and reflects our commitment to
maximizing investor value,” Zeph Mbugua, TransCentury’s chairman, said
in the statement.
The investment firm did not disclose the details of
how the initial debt was condensed by half and which compromises, if
any, it had to agree to in order to close the deal.
However, sources have indicated to the Business Daily
that the bondholders agreed to write-off half of the debt owed to them,
in consideration of the interest earned since the Eurobond was listed
in 2011.
They are also said to have softened their stance
given the impact that the weakened shilling has had on the bond over the
period, inflating the original dollar-denominated debt of Sh6 billion
to the current level.
The bondholders however expect to be paid the balance of the debt in coming months, the source said.
“The majority bondholders are pleased to have
reached an amicable and well-structured settlement with TransCentury
Group,” said Paras Shah, a partner at Coulson Harney, the law firm that
facilitated the transaction.
“Further, the majority bondholders congratulate
Kuramo Capital on their equity capital injection, which was a key factor
in reaching this settlement.”
TransCentury bondholders recently wrote to a select
group of the firm’s founder shareholders, laying out a set of demands
that was to see them get Sh4 billion in cash by March 25 and gain
control of the company by 2017.
Upon receipt of the initial sum in cash, the
bondholders wanted the redemption date to be extended by one year to
March 2017, according to the letter sent to Eddy Njoroge, Jimnah Mbaru
and the estate of the late James Gachui.
Thereafter, the creditors had proposed that
TransCentury undertakes a rights issue whose proceeds will be used to
settle the outstanding debt and that that the same bondholders will
underwrite the cash call
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