TransCentury Kenya Faces Threat of Default, Regulator Says
(Bloomberg)—TransCentury Ltd., a Kenyan investor in infrastructure projects, may be at risk of defaulting on its bonds and is among at least six domestic companies working with the Capital Markets Authority on liquidity constraints, the regulator said.
The company, based in the capital, Nairobi, has about $75 million of convertible bonds falling due on March 25, Paul Muthaura, the acting chief executive officer of the authority, said in a statement published in the Business Daily newspaper Monday. TransCentury is the guarantor of the bonds, which were issued by a Mauritius-based subsidiary, he said.
The company hasn’t converted the bonds into equity as expected after shareholders refused to be diluted further, Muthaura said.
“Due to this refusal, there is a perceived threat of a default by TCL,” he said. “The CMA has had several engagements with TCL management and board chairman and the firm is considering measures of arriving at a settlement since it has adequate assets to meet its obligations if given time.”
TransCentury spokeswoman Phyllis Gachau wasn’t available when Bloomberg called her seeking comment. Mauritian Financial Services Commission acting Chief Executive Officer P.K. Kuriachen didn’t answer his mobile phone when called for comment. Mauritian government offices are closed Monday for a public holiday.
Pending Statement
“We have made it extremely clear to the company that especially with the uncertainty in the market; they need to, as soon possible, put out the final details of the arrangement they are putting in place to allow investors to understand the current outlook,” Muthaura said in a phone interview. “So it will, without question, be before March 25.”
Holders of TransCentury’s bonds include London-based Charlemagne Capital Ltd., according to data compiled by Bloomberg. Sharat Dua, a portfolio manager at Charlemagne, didn’t immediately respond to an e-mailed request for comment. TransCentury shares climbed 0.9 percent to 6 shillings by 1:56 p.m. in Nairobi on Monday.
The CMA is also working with cement manufacturer ARM Cement Ltd., Mumias Sugar Co., a producer of the sweetener, real-estate company Home Afrika Ltd., national carrier Kenya Airways Ltd. and retailer Uchumi Supermarkets Ltd., Muthaura said in the statement.
‘Liquidity Challenges’
ARM Cement has had “liquidity challenges” that cast doubt on whether it would be able to meet its obligations on privately arranged commercial-paper programs, Muthaura said. The company has been operating on “large loans,” some of them foreign-denominated, and is expected to bring on board a strategic partner this month, he said.
ARM CEO Pradeep Paunrana said he would provide comment later on Monday. The company’s shares fell 6.1 percent to 31 shillings by 1:56 p.m. in Nairobi, heading for their biggest decline in a month on volume that was four times the three-month daily average.
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