Listed investment firm, TransCentury, has cut its losses by 64 per cent to Sh864 million in the year ended December 31, 2016 aided by a new capital injection that helped reduce the Sh2.4 billion loss chalked in 2015.
The firm, however, reported a 31 per cent drop in revenue from Sh11.7 billion recorded in 2015 to Sh8.1 billion with management citing the uncertainty around last year’s settling of the company’s convertible bond as part of the reason for the performance.
“The results were significantly affected by a temporary limitation in accessing credit lines from our financiers for the greater part of 2016 due to the perceived uncertainty in the resolution of the Eurobond which matured in March 2016,” explained the firm in a note accompanying the financial results.
Last year, TransCentury teetered on the verge of bankruptcy as the first tranche of a Sh8 billion five-year bond matured.
This forced the firm’s shareholders into a debt-equity swap with private equity firm Kuramo Capital to prevent a default.
It left the firm with Sh5.2 billion of long-term debt to settle alongside the Sh821 bond and a Sh320 million overdraft facility.
Conclusion of the Sh2 billion share deal with Kuramo Capital has since seen the private equity firm assume half of the board positions, with TransCentury banking on the new leadership and ongoing engineering and electricity infrastructure projects to change its fortunes.
“The engineering division had a 47 per cent drop in revenue year on year,” said the statement.
“The division, however, made remarkable progress in the latter part of the year in turning the tide with closure of an impressive contracted order book that currently stands at Sh12 billion and whose execution is in progress.”
Kuramo Capital’s entry was the culmination of a roller-coaster of events at the firm led by the acrimonious exit of key advisers, South African-based Rand Merchant Bank, owing to the board reportedly ignoring proposals for repayment of the five-year debt.
This was soon followed by resignation of two of the firm’s directors; chief executive Gachao Kiuna and Joe Karago within two days of each other.
The company reported assets have fallen from Sh21.8 billion in 2015 to Sh18.9 billion in 2016.