TransCentury Chairman, Shaka Kariuki, seized the opportunity during a panel discussion on Sustainable Trade Africa at the sidelines of COP28 in Dubai to advocate for Equity Bank to come to the negotiating table and support the company’s recovery.
Mr Kariuki, who shared the podium with Equity Bank Group CEO, Dr James Mwangi, pitched for the company, stating that TransCentury had a viable business model, strong corporate governance, and leadership. He noted that the company only needed stakeholder support to turn around.
Earlier this year, Equity Bank placed TransCentury and its subsidiary, East Africa Cables (EAC), under receivership due to unpaid debt, prompting a court battle to keep the Kibaki-era investment firm operational. The court temporarily halted the receivership process, providing an opportunity for the parties to renegotiate their positions. Mr Kariuki took the opportunity at COP28 in the UAE to break the ice.
Mr Kariuki highlighted Dr James Mwangi as a distinguished panelist and a good example of building a solid financial institution over time. He drew parallels with TransCentury, a company in the manufacturing sector, which struggled through various challenges in energy grid and off-grid manufacturing of cables and transformers.
Mr Kariuki emphasized that for a company to be successful, it needs strong governance, a scalable business strategy, an effective management team, and aligned key stakeholders committed to a sustainable business journey—a marathon, not a 100-meter dash.
As local interest rates rise amid an economic downturn, companies are struggling to convince lenders to reconsider their decision to cease operations, denying them the opportunity to turn things around.
TransCentury sought relief and attempted to raise Kes2 billion from its shareholders, a portion of which would go towards settling the debt. However, the firm only managed to raise Kes828 million.
In early June, Equity placed TransCentury and EAC under receivership after rejecting a request to write off a debt of over Kes2.8 billion ($20 million) owed by TransCentury Plc and another Kes1.948 billion owed by its subsidiary, EAC.
However, on June 19th, the debt-laden companies countered by seeking court orders to bar Equity from appointing receiver managers. The court granted these orders on June 26th.
In its case, Equity Bank argued that TransCentury, which sought fresh capital through a rights issue, only managed to secure Kes828 million, insufficient to pay off its debt.
However, TransCentury stated that it engaged with Equity “as a partner and in good faith, in pursuit of an amicable agreement for the payment of the debt owed.”
Following the ruling, both TransCentury and EAC can continue making their loan payments to Equity, demonstrating a commitment to meeting their obligations.
The infrastructure company informed the court that talks on settling the debt were ongoing when Equity appointed George Weru and Muniu Thoiti as receiver managers, and that “the exact amount due and owing has also not been ascertained and/or agreed upon.”