Kenya: Transcentury Plans Exit From the NSE

Kenya's infrastructure investments firm TransCentury Ltd (TCL) has called for an extraordinary general meeting on July 30 seeking shareholders' approval to delist from the Nairobi Securities Exchange after nine years of falling revenues and plummeting share price in a development.

If the proposal is approved then all the issued ordinary shares of the company, comprising 375,202,766 shares of par value Ksh 0.50($0.005) each, will be de-listed from the official list of the Alternative Investment Market Segment of the NSE, according to the firm's board.

Company data shows that over 60 per cent of the top 13 individual shareholders, who owned more than 71 per cent of the firm at the time of listing in 2011, have sold their shares (52.03 per cent) while the remaining five have significantly reduced their stakes in the loss making firm to as low as 19.24 per cent.

The firm's stock on the Nairobi bourse had dropped considerably to Ksh 2.45 ($0.02) by July 15, compared with the listing price of Ksh50($0.5) per share on July 14 2011; shareholders have lost 95 per cent of the value of their investments in the same period.

Delayed reporting

The firm, which has operations across East, Central and Southern Africa sought approval from the Capital Markets Authority to delay its financial performance figures for the year 2019 until the end of this month due to an equity transaction with its subsidiary East African Cables.

However, according to TCL's annual report for 2018, the firm incurred another loss of Ksh3.5 billion ($35million) down from a net profit of Ksh468.26 million ($4.68 million) in 2010 prior to its listing on the NSE by way of introduction.

During the period, its working capital turned negative as current liabilities exceeded current assets by Ksh11.16 billion ($111.6 million), making it difficult for the firm to finance short term financial obligations.

Auditors at KPMG Kenya said the events and conditions that have engulfed the firm indicate a material uncertainty that may cast significant doubt on the firm's ability to continue as a going concern, and therefore finding it difficult to realize their assets and discharge their liabilities in the normal course of business.

"Transcentury Plc is set to voluntarily delist from the NSE in line with on-going strategic initiatives upon receiving approval from its shareholders," said group chief executive Nganga Njiinu. "While we have seen liquidity reduce in the capital markets across the region, we have also seen an increase in funding that is available for private/ non-listed businesses, especially In the sectors that we focus on and have received interest from potential financiers who would provide capital that is structured in line with our strategic plan."

Changing focus

In a statement issued about two weeks ago, Mr Njiinu said the firm's focus now remains on attracting funding that is aligned to the Group strategy of realising full value from opportunities at hand. "A significant source of such capital however remains unavailable to the business while it remains listed, including the fast-growing pools of sector specific capital targeting private/ non listed businesses," he said.

"In addition to accessing funding for the company, TCL board and management envisions delisting will provide the company the opportunity for quick actions on strategic interventions and to refocus more resources to execution of strategy and accelerating growth."

In 2017 the firm announced a five year strategy (2018-2022) focusing on fund-raising, debt reprofiling to match cashflows, delivering a robust and fundable order book, and order book execution. As a result, TCL said over 90 per cent of its debt has been successfully restructured thereby strengthening the balance sheet and allowing more cash to be redirected to working capital.

Debt restructuring

The debt restructuring involved reduction in commercial debt across the Group by over 40 per cent since March 2016, increased debt tenure with most of the tenures falling between five and 10 years, and reduced debt service cash flows allowing TCL to redirect more of its operating cash to fund working capital.

TCL was incorporated on May 13, 1997, when a group of 29 professionals and investors in Kenya who wanted to build a Pan-African investment company started with an initial equity contribution of Ksh1 million($10,000) per member.

The firm was listed on July 14, 2011.

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