Afreximbank to take over Sh15bn TransCentury loans

TransCentury acting CEO Ng’ang’a Njiinu. Afreximbank could provide up to Sh2 billion in additional funding to the investment firm. PHOTO | DIANA NGILA 

By VICTOR JUMA, vjuma@ke.nationmedia.com

In Summary

• Afreximbank will also advance new loans to TransCentury to fund its expansion.
• The deal will see Afreximbank acquire multi-billion-shilling loans from lenders including Equity Bank and Standard Chartered Bank (Tanzania) that have provided long and short-term loans to TransCentury and its various subsidiaries.
• TransCentury’s long and short-term loans stood at Sh13 billion in the year ended December, tripling from the previous year’s Sh4.2 billion.

Cairo-based financier Africa Export-Import Bank (Afreximbank) is set to take over Sh15 billion worth of loans from creditors of investment firm TransCentury.

The multilateral development finance institution will also advance new loans to the Nairobi Securities Exchange-listed firm to fund its expansion.

The deal will see Afreximbank acquire multi-billion-shilling loans from lenders including Equity Bank and Standard Chartered Bank (Tanzania) that have provided long and short-term loans to TransCentury and its various subsidiaries.

“The group entered into an agreement with Afreximbank with a view to reduce the number of relationships and maintain a few key strategic relationships for all working capital and asset financing requirements of the business across the Sub-Saharan Africa,” TransCentury says in its latest annual report.

“The process involves restructuring and consolidation of all existing trade finance and term loan facilities into one global facility with Afreximbank amounting to $150 million (Sh15.1 billion), including additional facilities to fund the group’s growth and expansion.”

TransCentury’s long and short-term loans stood at Sh13 billion in the year ended December, tripling from the previous year’s Sh4.2 billion.

This indicates that Afreximbank could provide up to Sh2 billion in additional funding to the investment firm in what will bring the consolidated loans under the Pan African financier to the envisaged Sh15 billion.

TransCentury’s move is seen as intended to reduce the complexity and costs of dealing with multiple lenders in different currencies in Kenya and other markets where it operates.

READ: TransCentury loss hits Sh2.4bn as forex burden takes heavy toll

Equity Bank is one of the largest creditors of TransCentury. The investment firm secured its Sh7.7 billion Equity Bank debts by pledging various assets including shares in its subsidiary East African Cables Limited.

The bank charges an interest rate of 8.5 per cent on the loans. Tanelec Limited, another subsidiary of TransCentury, has a $13.6 million (Sh1.3 billion) loan from Standard Chartered Bank (Tanzania) on which a minimum interest rate of six per cent is charged.

Other creditors of the investment firm include Chase Bank, Eco Bank SARL and Commercial Bank of Africa Limited.

TransCentury said its bank loans attracted an average interest rate of 12.31 per cent last year, up from 11.96 per cent in 2014. Interest on its overdraft facilities also rose to 11 per cent from 10.5 per cent over the same period.