Centum to pay Sh6bn bond via land sales

Centum Investment CEO James Mworia announces results at the Nairobi Securities Exchange on November 28. PHOTO | DIANA NGILA 

By PATRICK ALUSHULA
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Summary

• Centum intended to retire the bond early but has decided to let it mature, given it has paid off other borrowings amounting to Sh10 billion in the last few months.
• The firm will earn up to Sh6.1 billion from selling residential houses and Sh13.2 billion from the land sale, with part of the money expected to come in before the deadline for paying off the bond.

Centum Investment will use part of the money received from the sale of residential apartments and land to pay off Sh6 billion corporate bond set to mature June next year.

Chief Executive James Mworia said the company intended to retire the bond early but has decided to let it mature, given it has paid off other borrowings amounting to Sh10 billion in the last few months.

The firm will earn up to Sh6.1 billion from selling residential houses and Sh13.2 billion from the land sale, with part of the money expected to come in before the deadline for paying off the bond.

“We have a number of transactions in the real estate portfolio that will release more liquidity. We also have active land sale negotiations worth Sh13.2 billion, which will support repaying the bond,” he said.

“Our strategy was to build up liquidity and pay down our debt so that we build a debt capacity to allow us back to the debt market again as we close new investments.”

Honouring bond repayments has become a key area of focus since Imperial Bank, Chase Bank, Kaluworks and Nakumatt defaulted.

Centum borrowed the money in 2015 to fund its investments in financial services, energy and real estate. Its profits have grown during the period, hitting Sh6.79 billion in the half-year of 2019/20 financial year from Sh2.07 billion.

The company said it has sold 827 of the 1,316 residential units across its mixed-use developments located in Nairobi, Kilifi and Uganda. The units boast of a pre-sell level of 63 percent.

The sold units have a revenue potential of Sh6.1 billion with Centum having received about Sh1.34 billion.

Centum finance costs rose by 66 percent to Sh2.03 billion in the half-year ended September even as it paid off about Sh10 billion to cut debt to Sh22 billion.

The firm is now eyeing the next round of fundraising for fresh investments. It has so far exited 10 of its 15 investments.

Mr Mworia said the firm is eyeing opportunities for investment in assets with significant upside potential to achieve target returns.