TransCentury fails to hit its Sh2bn cash call target
Competition Authority of Kenya Chairman Shaka Kariuki.
Infrastructure-based investment firm TransCentury has missed its Sh2 billion cash call target despite a second attempt.
Results posted yesterday showed that the firm’s rights issue had a 40.13 per cent performance rate, representing the mobilisation of Sh828.1 million from the uptake of 752.8 million shares.
The company had offered its shareholders an additional 1.876 billion shares valued at Sh2.063 billion and representative of five new shares for every existing share held for a price of Sh1.10 per share.
Shareholders accepted to take up 480.1 million shares valued at Sh528.1 million under the ratio of entitlement before the application for additional shares, which totalled 498,725 with a value of Sh548,598.
A further 272.7 million shares were applied for under the conversion of shareholder loans with the value of shares taken up through the conversion standing at Sh300 million.
Kuramo Capital, which presently holds a 25 per cent stake in the company, had opted to convert part of its Sh1.9 billion in loans extended to TransCentury to pay for its portion of the rights issue.
However, TransCentury did not disclose the size of the conversion, which would see Kuramo raise its stake in the company to a controlling hold.
The trading of the new shares on the Nairobi Securities Exchange (NSE) is expected to commence on April 26.
The rights issue had opened on December 29 intending to unlock funding for the firm to recapitalise its business, reduce debt and provide working capital.
The rights issue was extended from the initial closing date of January 23 to February 3 indicating that the take-up may have been below expectations.
The offer would hold beyond the closing date with TransCentury reopening the issuance on March 20 to March 31.
The re-opening was preceded by an Extraordinary General Meeting on March 16 where shareholders cleared the conversion of a shareholder’s loan by Kuramo Capital to pay for its share of the rights issue.
While it was unclear whether Kuramo Capital would inject new capital in addition to the shareholder loan conversion, TransCentury said the conversion would still align with the rights issue objective of reducing debt.
Rights issues raise cash firms by allowing existing shareholders to purchase new shares at a discount.
Recent years have nevertheless seen companies shun the practice on the back of falling share prices at the NSE.
Only Crown Paints has issued a rights issue in the last seven years compared to 15 rights issues between 2010 and 2016.
TransCentury’s share price has fallen through the rights issue and closed trading for the week at Sh0.93 or 15.5 per cent below the rights issue offer price.
