TransCentury bond holders have now given the investment firm an additional six months from March 25 to clear a $40 million (Sh4.04 billion) debt it owes them after they earlier agreed to halve the firm’s principal dues to that amount.
The company’s acting chief executive Ng’ang’a Njiinu said on Tuesday the six-month lifeline has been handed to it as part of a deal brokered with the bond holders, which saw them also agree to retire half of the debt owed to them.
“We have up to six months extension to pay the debt from the March 25 date, but we are optimistic of clearing it earlier before the new due date,” Mr Njiinu told the Daily Nation in an interview at his office.
Mr Njiinu, however, remained cagey on how bond holders agreed to set aside the initial debt by condensing it by half, and whether the move was accompanied by compromises.
But ruling out strings attached to the debt relief deal, Mr Njiinu insisted that the bond holders “were happy to get the $40 million dollars and walk away for good,” as part of the landmark final settlement with the investment firm.
“They are happy to get 40 million dollars and that’s it. It will be a full and final settlement. It is good for our shareholders,” Mr Njiinu said as he termed the deal a big win.
He said the bond holders had earned interest since the Eurobond was listed in 2011, insisting that it made business sense. A letter written by the bond holders Farallon Capital Europe LLP and South Africa-based Investec Asset Management Ltd to a select group of TransCentury founder shareholders, had earlier proposed the means by which the company could settle the balance of Sh4 billion beyond the March 25 deadline.
According to the letter, earlier seen by the Nation, upon receipt of the initial sum in cash, the bond holders had suggested that the redemption date be extended by one year to March 2017.
Thereafter, the creditors had proposed that TransCentury undertakes a rights issue whose proceeds would be used to settle the outstanding dues, according to the letter sent to Mr Eddy Njoroge, Mr Jimnah Mbaru and the estate of the late James Gachui — the founder chairman.
Under the deal, the same bond holders would underwrite the cash call, meaning they would be in a position to assume majority control of TransCentury should its current owners be unable to pay the final balance.