TransCentury gets lifeline after cash call misses target
TransCentury Group chief executive Nganga Njinu during an interview in his office in Nairobi on July 13, 2020.
The Capital Markets Authority (CMA) has handed TransCentury a lifeline to salvage its Sh2.06 billion cash call which fell short of its collection target.
The company targeted to raise at least Sh1.03 billion to declare the rights issue a success. Sources familiar with the transaction said that the rights issue raised slightly over Sh500 million.
The listed investment holding company has now secured a green light from the CMA to re-open its rights issue from March 20-31,2023—hoping to achieve its fundraising target on a second attempt.
“TransCentury PLC wishes to notify its shareholders and the public that the Board of Directors has resolved and obtained approval of the Capital Markets Authority to re-open the rights issue offer period. This is to allow the company to seek shareholders’ approval to enable the conversion of shareholder loans to ordinary shares as a mode of payment of rights” the company said.
This means TransCentury’s anchor shareholder, Kuramo Africa Opportunity Kenya Vehicle Ltd, will be seeking shareholders’ approval to convert part of its debt in the company into equity, a move that will be tailored to help TransCentury not only ramp up the funding raised through the rights issue but also restructure its balance sheet by reducing the debt load that is dragging the business’ performance.
In its latest available filings, half year ended June 2021, TransCentury incurred Sh 553.9 million in interest expenses implying debt service gobbled up 22.0 percent of the company’s total revenue at the time.
If this secures shareholders’ approval, Kuramo, which is TransCentury’s major shareholder, will see its stake in the listed entity rise from the present 25 percent. On Dec 21st, 202 through a public notice, TransCentury revealed CMA had granted Kuramo take-over exemption on April 27, 2022, allowing the major shareholder to acquire an additional stake beyond its pro-rata allocation should such an opportunity arise during the rights issue.
“TransCentury is pleased to announce that on April 27th, 2022 the CMA granted the request for take-over exemption thereby allowing the major shareholder (Kuramo) to acquire additional shares beyond their allocation should the shares be available during the rights issue”, read the December 21st, 2022 public notice.
Kuramo acquired its 25 stake in TransCentury following its $20.0 million investment in 2016 which saw it secure 93.8 million new ordinary shares in the listed entity.
