Cash-strapped TransCentury in search for fresh capital

TransCentury Chief Executive Officer Ng'ang'a Njiinu speaks with Saturday Standard at his office in Nairobi. [Elvis Ogina, Standard]

Infrastructure development firm TransCentury is looking for fresh capital after four consecutive years in losses left it in negative position.

Chief Executive Officer Ng’ang’a Njiinu says the firm is addressing the capital allocation decisions to ensure that when the fresh funds come in, their concentration will be on projects that can give a return to the business.

However, with a loss of Sh4.33 billion and current liabilities outstripping current assets by Sh8.5 billion, auditors are casting doubts on ability of the firm to continue being in business.  

“We are looking at doing the fundraising at some point this year. We have some of the debts that still need to be re-tenured and we have had a bit of success by restructuring some of them,” Mr Njiinu told Saturday Standard.

A big chunk of the Sh14.3 billion current liabilities is Sh6.77 billion in trade payables and Sh5.3 billion of long-term loan that is maturing in the next 12 months, as well as a Sh1.2 billion portion of bond.  

Fundraising

The CEO says the company is at the tail-end of restructuring the remaining debt to make it match the expected cash flows so as to save it from working capital constraints. “Once we do that, we want to raise money from shareholders or the market and put it in the orders as opposed to paying debt,” he said.

He explained that the company is counting on huge order book to the tune of Sh26 billion that requires capital to be unlocked and is confident of immediate impact if the fundraising succeeds.

Mr Njiinu said that the previous debt profile was complicated since it had short maturity period that exposed the company to high finance cost.

In early 2016, TransCentury had a Sh8 billion bond that was maturing and there was a view in the market that it was going to struggle in honouring it.

“We eventually resolved it but during that period, we lost a significant chunk of our credit lines for working capital. That slowed down our execution as well as cash flow and revenues,” he said.