CMA asks Transcentury to disclose debt settlement plan

The share price climbed to Sh57 before starting to roll back. Today, it is worth Sh2.4 billion.

Monday February 8 2016

Capital Markets Authority Chairman Paul Muthaura during a meeting at Hilton Hotel on May 28, 2015. The markets authority said it had engaged the management of the company in connection with the strategies being put in place. PHOTO | DIANA NGILA | NATION MEDIA GROUP

Capital Markets Authority Chairman Paul Muthaura during a meeting at Hilton Hotel on May 28, 2015. The markets authority said it had engaged the management of the company in connection with the strategies being put in place. PHOTO | DIANA NGILA | NATION MEDIA GROUP 

By OTIATO GUGUYU
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The Capital Markets Authority has asked TransCentury to tell the public how it intends to settle the Sh8 billion debt that falls due in two months.

In October last year, the company announced it would fundraise to refinance the loan or restructure the debt before it became payable.

However, a decision by TransCentury bondholders to refuse a stake in the company threw a spanner into the works as maturity of the Sh8 billion bond draws close.

“The company has committed to publicly communicate the steps intended to be taken with regard to the treatment of the bond, as well as the longer term strategy of the company to allow investors to make an informed decision,” CMA told the Daily Nation last week.

The market regulator said that due to market dynamics, the bond holders communicated their decision not to exercise this option for conversion prior to the date set out in the documentation.  

As a result, and in accordance with the terms of the bond, it shall fall due for payment on the maturity date of March 25, subject to a renegotiation of the terms with the bond holders.

TransCentury has two months to come up with the money as investor anxiety hits fever pitch over the fact that the firm owes more than it owns.

TransCentury was valued at Sh13.35 billion upon entering the stock market in July 2011, when it listed by introduction some 267 million shares at Sh50 apiece.

The share price climbed to Sh57 before starting to roll back. Today, it is worth Sh2.4 billion.

The markets authority said it had engaged the management of the company in connection with the strategies being put in place and will continue to work with the company to ensure relevant information is made available in a timely manner to inform not only the investors in the bond, but also the public shareholders of the firm.

TransCentury has been trying to assure investors that it is on course to repaying the debt despite the sudden resignation of Chief Executive Gachao Kiuna in January.

Mr Kiuna left the investment firm, followed by Mr Joe Karago, a non-executive director, who resigned the next day.

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