Equity Bank Group has placed infrastructure-basee investment firm TransCentury and East African Cables under receivership.
This folllows a mounting debt that is currently estimated to be around Sh. 4.8 billion that TransCentury has failed to repay Equity.
Following this, Equity has appointed Muriu Thoithi and George Weru from Price Waterhouse Coopers as joint receivers at TransCentury effective June 16, 2023.
“The powers of the receivers extend to all assets and undertakings of the company. Only the Receivers and their representatives are authorised to handle the assets of the company,” said Equity Bank in a statement.
“Any person who purports to hold, receive, use, or attempts to buy or sell, contract or otherwise deal with the assets of the company or with the company without the prior written consent of the receivers will be acting in contravention of the law and will be liable to legal action.”
The bank has also appointed Thoithi and Weru as the joint administrators of East Africa Cables Limited, a subsidiary of TransCentury.
“With their appointment, the administrators shall now take control over the assets and the management of the affairs of the company,” the bank on the placement of East African Cables under receivership.
“The joint administrators are currently engaging all key stakeholders of the company as they seek to achieve the best possible outcome of the current situation in the company.”
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The fall of TransCentury comes after the investment firm failed to raised cash in recent bids. It also followed a failed proposal that would have seen it oay Equity about Sh. 100 million from some Sh. 500 million that it had raised from a rights call.
It is estimated that TransCentury has debts of up to Sh. 9 billion. Out of these, it owes Equity Bank Sh. 4.8 billion. In its recent rights issue bid to raise cash, TransCentury was targeting to get Sh. 2 billion. However, it ended up getting Sh. 548 million.
The rights issue had raised Sh. 828.1 million, a 40.13 per cent subscription from the uptake of 752.8 million new shares. TransCentury had offered shareholders 1.876 billion shares that were valued at Sh. 2.063 billion at five new ordinary shares for each held for Sh. 1.10 each.
Reports show that shareholders took up 480.1 million shares worth Sh. 528.1 million before the application for additional 498,725 shares with a value of Sh. 548, 598. A further 272.7 million shares were taken up by converting shareholder loans for Sh. 300 million.
From this failed bid, TransCentury offered Equity Bank Sh. 108 million out of the Sh. 548 million cash netted. However, this was turned down as it was nothing but a tiny percentage of the total billions owed.
“From the Sh. 538 million funds raised, the client proposed to down pay Sh. 108 million to our debt and requested debt significant discounts of over $20 million and a new restructure over the facilities. This proposal was reviewed and considered unacceptable,” Equity Bank said in an internal statement.
“The bank has thus communicated this to the customer and declined their proposal for a restructure and issued demands as of June 8, 2023, with the plan being to initiate a receivership by June 16, 2023.”
TransCentury also requested a $20 million (Sh. 2.79 billion) debt restructuring as part of a deal to avoid what had now become an imminent collapse.
However, Equity Bank noted that TransCentury and its subsidiaries East African Cables and Civicon Africa Group Limited were neck deep in debts without any tangible recovery plan or projects to shore up funds.
