TransCentury of Kenya Receives Funding as Bond Payment Looms

  • U.S.-based company to inject $20 million of `fresh equity'
  • TransCentury's convertible-bond issue falls due March 25

TransCentury Ltd., a Kenyan investor in infrastructure projects, raised $20 million from a U.S.-based company to help settle a convertible bond that falls due next week.

The financing from Kuramo Capital Management LLC, an Africa-focused investment manager, will complement “other funding options” to be used for the debt payment and infrastructure projects, the Nairobi-based company said in a statement e-mailed by the city’s stock exchange Tuesday. TransCentury has about $75 million of bonds falling due March 25.

Kenya’s Capital Markets Authority said March 7 that TransCentury faces a “perceived threat of default” after the company failed to convert the bonds into equity as expected because shareholders refused to be diluted. The next day, TransCentury issued a statement reassuring investors that it plans to settle the debt “in the very near future and in any event, before maturity.”

Kuramo Capital may be among a number of investment partners that TransCentury is talking to and the company may also be considering raising additional debt, Eric Musau, an analyst at Standard Investment Bank Ltd., said by phone.

‘Negotiating Tactic’

“I think they will come up with new funding options in the next seven days,” he said. “The agreement with Kuramo could also be a negotiating tactic so that anyone they probably had not agreed with in discussions, could see they are making traction.”

Among the options the company is considering is a sale of stock to existing shareholders, Phyllis Gachau, a spokeswoman for TransCentury, said in an e-mailed response to questions.

A “rights issue is still in the plan going forward,” Gachau said. “This will give the current shareholders a chance to participate in the capital raise.”

Kuramo Capital, which has its headquarters in New York, didn’t immediately respond to an e-mailed request for comment.

TransCentury, which started out as an investment club for wealthy Kenyans, has a pipeline of infrastructure projects worth more than $500 million, according to its website. The company is also involved in the construction of a 35-megawatt geothermal power plant and owns 68.4 percent of East African Cables Ltd., a Nairobi-based engineering company.

Shares in TransCentury are worth less than a tenth of the record 60 shillings they traded at on the day the company listed in July 2011. The stock closed gained as much 7.1 percent on Tuesday before closing unchanged at 5.65 shillings.

Before it's here, it's on the Bloomberg Terminal.