Another loss making Kenyan company part II

Another loss making Kenyan company part II

COMPANIES
National Cement completes buyout of ARM Kenya assets
WEDNESDAY, JANUARY 8, 2020 22:00
Narendra Raval

National Cement chairman Narendra Raval. FILE PHOTO | NMG
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National Cement Company, owned by billionaire businessman Narendra Raval, Wednesday paid Sh5 billion to complete its purchase of ARM Cement assets in Kenya.

The money was paid to ARM’s administrators, PricewaterhouseCoopers (PwC), which was appointed by creditors to run the company after it defaulted on banks and bondholders.

“We have paid $50 million (Sh5 billion) to complete the acquisition of ARM Cement,” said Mr Raval, the chairman and major shareholder of National Cement.

The money was paid through KCB which also helped fund the deal. National Cement provided $15 million (Sh1.5 billion) while KCB provided $35 million (Sh3.5 billion). KCB has funded most of the businessman’s deals.

National Cement in May last year signed an agreement to buy the company’s factories, land and mining licences in Kenya but the process was delayed after ARM’s former chief executive Pradeep Paunrana went to court opposing the transaction.

He argued that PwC ignored higher bids, including Sh6.5 billion offered by a consortium which he was part of. The administrator countered, saying that Mr Paunrana’s bid was not backed by proof of funds and was filed outside the offer period. The case was subsequently thrown out, paving the way for National Cement to proceed with the deal.

The payment effectively now places all Kenyan assets of ARM Cement under National Cement, a wholly-owned subsidiary of the Devki Group of companies. Devki was founded by Mr Raval. Besides selling ARM’s Kenyan assets, the administrators are also reviewing bids for the company’s assets in Tanzania.

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National Cement completes buyout of ARM Kenya assets

National Cement Company on Wednesday paid Sh5 billion to complete its purchase of ARM Cement assets in Kenya.
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Cement companies grapple with debts on demand slump
THURSDAY, MAY 14, 2020 0:01
Bamburi Cement engineers

Bamburi Cement engineers during a past launch of a mobile concrete testing laboratory in Nairobi. PHOTO | SALATON NJAU | NMG

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Cement makers face a tough year as pandemic-induced demand slump undermines the ability to service the huge finance costs resulting from recent investments made in their battle for market share.

Bamburi Cement , which commissioned an additional 0.9 million-tonne grinding capacity per year to bring its total installed annual capacity to f 3.2 million tonnes, for instance, says its finance costs hit Sh436 million last year, from Sh258 million in 2018.

This was on account of the Sh2 billion long-term debt acquired by its Uganda subsidiary Hima Cement Limited (HCL) in mid-2018. The debt was used to finance the HCL’s capacity expansion project.

Bamburi chairman John Simba said the company had hoped for a windfall from the removal of the interest rate cap, stable economy and the Big Four agenda.

However, the pandemic has redirected all investment to the fight against the coronavirus, forcing the company to review its outlook.

“Post-Covid-19, with government expenditure, refocused towards the war on Covid-19, we will need to reassess the market and the general economic situation,” he said.

Also sailing the same waters is Devki Group’s National Cement Company, which has been on an expansion spree in recent months.

“We have seen a big drop in demand up to 30 percent because those who have finished projects do not want to start new ones. Profits are down and it is challenging. But there is nothing we can do because it is a global challenge and it is not just us,” said Devki Group founder Narendra Raval.

Last year, it acquired Athi River Mining and Cemtech to attain an annual consolidated production capacity to two million tonnes. Early this year, it set up a Sh6 billion plant in Salgaa, Nakuru, raising its production capacity to 3.5 million tonnes.

Market headwinds underpinned by lower demand for cement in Kenya and the inaccessibility of the landlocked markets such as Rwanda have pushed the cement makers on the edge.

Bamburi, for instance, booked a 37 percent decline in after-tax profit from Sh572 million in 2018 to Sh359 million last year.

Despite huge capital expenditure to fight for market share cement companies are facing a decline in the construction sector which saw consumption decline 1.3 percent last year.

Cement companies grapple with debts on demand slump


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Ngapulila said:
KQ inapumulia mashine😁😁😁😁
Click to expand...
Mambo ya ku-copy the West! ET waligoma kusimamisha operation wakijua wana a trophy to protect! Cha ajabu hata baada ya measures covid19 infection ipo juu na still wanapanga kuanza safari tena! cha ajabu zaidi Ethiopia ina infections ndogo kuliko Kenya!
 
Kenya disputes Sh16bn Tullow oil project compensation bill
TUESDAY, MAY 26, 2020 8:00
Oil tanks at Ngamia 8

Oil tanks at Ngamia 8, in Lokichar, Turkana County on February 18, 2020. PHOTO | JARED NYATAYA

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Kenya has rejected a fraction of the compensation sought by British oil explorer Tullow Oil and its partners amounting to Sh16 billion ($150 million) for the firm’s eight-year work in the Turkana County oil fields.

Tullow has disclosed that the government has dismissed the Sh16 billion out of the Sh204 billion compensation bill that the firms had presented to the Ministry of Petroleum.

Oil firms were to recover their exploration costs over the years once production and sale of the commodity start, which in Kenya’s case is planned for 2022.

However, Tullow required a commitment from the government that Kenya owes it $2 billion (Sh213 billion) and wants to use the pledge to sweeten the offer for sale of its stake in the country.

“The ministry audit has suggested that eight percent of this expenditure (around $150 million – or Sh16 billion) does not qualify for Cost Recovery. The partners and the GoK will now work together to agree on a final number,” Tullow Kenya Managing Director Martin Mbogo told the Business Daily in an e-mail. “The final audit reports received so far indicate the partners have spent $2.04bn since 2010.”

A lack of agreement on the compensation could force Kenya and Tullow to go for arbitration in the UK in line with the crude oil exploration contract.

The exploration bill has been the subject of speculation for years following delays by the government to hire a firm to audit the costs.

Kenya hired a Cairo-based audit firm, Swale House Partners, in 2016 for the audit, whose findings have seen the State declare a compensation bill of $1.89 billion owed to Tullow and its partners – the Toronto-listed Africa Oil and the French oil major Total.

Tullow and Africa Oil, which holds a 25 percent stake in the blocks, first discovered crude oil in the Lokichar Basin in 2012.

Tullow estimates the fields contain 560 million barrels in proven and probable reserves and expects them to produce up to 100,000 barrels per day from 2022.

Now, Tullow and Total aim to reduce their stakes in Kenya’s first oil development, with a joint sale that could see Tullow exit Kenya.

Tullow, which operates the project, plans to sell a significant chunk of its 50 percent stake in the blocks. Buyers of the stakes would require clarity and commitment from Kenya on the compensation bill, which will also influence the buyout prices.

Kenya had projected to start commercial oil production in 2022, but several hurdles - including Tullow’s recent declaration of force majeure on the project - have added uncertainty on the grand project.

Force majeure means unforeseeable circumstances like war, strikes and epidemics that prevent a party from fulfilling a contract, shielding them from legal suits.

“Tullow and its partners have called Force Majeure because of the effect of restrictions caused by the coronavirus pandemic on Tullow’s work programme and recent tax changes. Calling Force Majeure will allow time... for the Joint Venture and Government to discuss the best way forward,” Tullow said.

Total and Tullow Oil had agreed with the government to develop a crude oil pipeline from Lokichar to Lamu on Kenya’s coast, setting the stage for commercial export of crude oil from the Turkana fields.

The exports were also to kick off reimbursement of Tullow investments from exploration to the output of oil.

Kenya disputes Sh16bn Tullow oil project compensation bill
 
Why glass production in Kenya is grinding to a halt
By JECKONIA OTIENO | January 6th 2019 at 00:00:00 GMT +0300
bcdudohonofqje6yzu5c30f074f0b96.jpg

A section of Coca-cola manufacturing plant in Nairobi on October 24, 2018 [David Njaaga, Standard]
BUSINESS NEWS
Companies that use glass for packaging are bypassing the local manufacturers and sourcing from other countries
The blazing, churning automatic machines inside Kenya’s oldest glass manufacturing company could grind to a halt and with it hundreds of jobs lost.

​
This is attributed to unfavourable business environment that has exposed Kenya’s only two glass manufacturers, Milly Glass Works and Consol Glass Kenya, to stiff - at times unfair - competition from foreign firms.

The two are among only three glass manufacturing companies in East Africa, the third being Kioo Limited in Tanzania.

Companies that use glass for packaging are bypassing the local manufacturers and sourcing from other countries, thus forcing the local firms to find market elsewhere. Most of the imports are from Egypt.

SEE ALSO: 'Hug glove' gives Canada family bit of normalcy in pandemic
Documents in our possession show that between August and December last year, 499 40-foot containers with empty bottles entered the country through Mombasa port.

Largest bottlers
Most of it was imported by Kenya’s largest bottlers, Coca Cola Company - through Almasi, Equator and Nairobi Bottlers - and East African Breweries through UDV (Kenya) Limited.

Between July and December last year, the two companies imported 288 40-foot containers from Misr Glass Manufacturing Company, an Egyptian firm.

Close to three quarters of the total imports into Kenya were actually from Misr Glass with some containers being brought in by other spirit packers such as Patialla and Crywan.

While local manufacturers do not blame firms for bypassing their products, they say the move is driving them out of business. They argue that they have the capacity and have been supplying the companies for years.

SEE ALSO: Glass manufacturer targets growth with fresh upgrade
Milly Glass Managing Director Mohamed Rashid says one of the main reasons why local bottlers are going for foreign bottles is the high cost of doing business.

“Most of these industries are going outside the country because with rising cost of production, prices have to increase to cover overheads,” he says.

For the past 18 months, Mr Rashid says, Coca Cola, which was a regular customer, has not bought a single bottle from the company.

It must not be lost that the cost of production in Egypt is lower mainly because of cheaper energy costs and direct government subsidies given to the glass manufacturers.

The Oxford Business Group reports that in 2016, the Egyptian government announced a four-year, five-pillar strategy to help transition the country into a major regional industrial centre and export hub.

SEE ALSO: Hell hath no fury like political sponsor rattled
“The strategy sets specific targets to support this, including increasing the annual industrial growth rate to eight per cent, the industrial contribution to GDP to 21 per cent and non-oil exports by an annual rate of 10 per cent through to 2020,” says the report.

Local companies also imported bottles from Pragati Glass Gulf LLC and Al Zain both of Oman.

“We produce most glass products used in Kenya but now we do not have the market which makes it untenable and if factors do not change then we shall have to make a decision,” says Rashid.

The sentiments have been echoed by Consol Managing Director Joe Mureithi, who argues that the glass manufacturers are facing an uncertain future.

“All we ask for is for the Government to protect the manufacturing industry so that local companies that use glass can buy from local producers,” says Mr Mureithi.

Ripple effect
If glass manufacturers close down, the ripple effect will be felt far and wide, first among them being job losses.

Milly Glass employs 550 workers with suppliers of raw materials to the factory including Kenya Power, Tata Magadi Soda Company, fuel and liquified gas companies. Local firms have stock of up to 8months. Alongside this would be loss of tax revenue running into millions of shillings.

Rashid says the solution is simple. “President Uhuru Kenyatta has named manufacturing as one of the key pillars of his Big Four Agenda; reducing the cost of doing business is one sure way of achieving this agenda.”

He says over the past four years, the cost of electricity has risen by 45 per cent while costs of fuel and liquified gas have also risen by 45 per cent and 30 per cent respectively.

Why glass production in Kenya is grinding to a halt
 
Geza Ulole said:
Why glass production in Kenya is grinding to a halt
By JECKONIA OTIENO | January 6th 2019 at 00:00:00 GMT +0300
bcdudohonofqje6yzu5c30f074f0b96.jpg

A section of Coca-cola manufacturing plant in Nairobi on October 24, 2018 [David Njaaga, Standard]
BUSINESS NEWS
Companies that use glass for packaging are bypassing the local manufacturers and sourcing from other countries
The blazing, churning automatic machines inside Kenya’s oldest glass manufacturing company could grind to a halt and with it hundreds of jobs lost.

​
This is attributed to unfavourable business environment that has exposed Kenya’s only two glass manufacturers, Milly Glass Works and Consol Glass Kenya, to stiff - at times unfair - competition from foreign firms.

The two are among only three glass manufacturing companies in East Africa, the third being Kioo Limited in Tanzania.

Companies that use glass for packaging are bypassing the local manufacturers and sourcing from other countries, thus forcing the local firms to find market elsewhere. Most of the imports are from Egypt.

SEE ALSO: 'Hug glove' gives Canada family bit of normalcy in pandemic
Documents in our possession show that between August and December last year, 499 40-foot containers with empty bottles entered the country through Mombasa port.

Largest bottlers
Most of it was imported by Kenya’s largest bottlers, Coca Cola Company - through Almasi, Equator and Nairobi Bottlers - and East African Breweries through UDV (Kenya) Limited.

Between July and December last year, the two companies imported 288 40-foot containers from Misr Glass Manufacturing Company, an Egyptian firm.

Close to three quarters of the total imports into Kenya were actually from Misr Glass with some containers being brought in by other spirit packers such as Patialla and Crywan.

While local manufacturers do not blame firms for bypassing their products, they say the move is driving them out of business. They argue that they have the capacity and have been supplying the companies for years.

SEE ALSO: Glass manufacturer targets growth with fresh upgrade
Milly Glass Managing Director Mohamed Rashid says one of the main reasons why local bottlers are going for foreign bottles is the high cost of doing business.

“Most of these industries are going outside the country because with rising cost of production, prices have to increase to cover overheads,” he says.

For the past 18 months, Mr Rashid says, Coca Cola, which was a regular customer, has not bought a single bottle from the company.

It must not be lost that the cost of production in Egypt is lower mainly because of cheaper energy costs and direct government subsidies given to the glass manufacturers.

The Oxford Business Group reports that in 2016, the Egyptian government announced a four-year, five-pillar strategy to help transition the country into a major regional industrial centre and export hub.

SEE ALSO: Hell hath no fury like political sponsor rattled
“The strategy sets specific targets to support this, including increasing the annual industrial growth rate to eight per cent, the industrial contribution to GDP to 21 per cent and non-oil exports by an annual rate of 10 per cent through to 2020,” says the report.

Local companies also imported bottles from Pragati Glass Gulf LLC and Al Zain both of Oman.

“We produce most glass products used in Kenya but now we do not have the market which makes it untenable and if factors do not change then we shall have to make a decision,” says Rashid.

The sentiments have been echoed by Consol Managing Director Joe Mureithi, who argues that the glass manufacturers are facing an uncertain future.

“All we ask for is for the Government to protect the manufacturing industry so that local companies that use glass can buy from local producers,” says Mr Mureithi.

Ripple effect
If glass manufacturers close down, the ripple effect will be felt far and wide, first among them being job losses.

Milly Glass employs 550 workers with suppliers of raw materials to the factory including Kenya Power, Tata Magadi Soda Company, fuel and liquified gas companies. Local firms have stock of up to 8months. Alongside this would be loss of tax revenue running into millions of shillings.

Rashid says the solution is simple. “President Uhuru Kenyatta has named manufacturing as one of the key pillars of his Big Four Agenda; reducing the cost of doing business is one sure way of achieving this agenda.”

He says over the past four years, the cost of electricity has risen by 45 per cent while costs of fuel and liquified gas have also risen by 45 per cent and 30 per cent respectively.

Why glass production in Kenya is grinding to a halt
Click to expand...
Nakumatt ilipokufa nilifikiri Tanzania itatupiku 😁
 
Fairmont shuts down Norfolk, Mara Safari Club hotels; all employees fired
By Ian Omondi For Citizen Digital
time updated
Published on: May 28, 2020 12:06 (EAT)


Fairmont shuts down Norfolk, Mara Safari Club hotels; all employees fired

Fairmont The Norfolk hotel in Nairobi. PHOTO | COURTESY

The management of Fairmont Hotels and Resorts has resolved to shut down two of their establishments and fire all employees over projected effects of the COVID-19 pandemic on business.

Country General Manager Mehdi Morad, in a memo seen by Citizen Digital, said operations at Fairmont The Norfolk and Fairmont Mara Safari Club have ceased; with the latter also having experienced recent flooding.

“Due to the uncertainty of when and how the impact of the global pandemic will result in the business picking up in the near future, we are left with no option but to close down the business indefinitely,” wrote Mr. Morad.

“It is therefore the decision of the management to terminate the services of all its employees due to ‘frustration’ by way of mutual separation and taking into account the loyalty and dedication the employees have put into the success of our company in the previous years.”

Mr. Morad, while stating that termination letters will be issued to the employees by Friday next week, added that they will however be entitled to one month’s pay as well as their pension.

“Employees will be entitled to one month’s pay in lieu of notice. You will be entitled to your pension as per the rules of the Scheme,” he added.

He further stated that the management was unable to meet other demands by the employees due to financial constraints.

CITIZEN TV

Fairmont shuts down Norfolk, Mara Safari Club hotels; all employees fired - Citizentv.co.ke



 
KQ forecasts $500m revenue loss by December

SATURDAY JUNE 27 2020

Kenya Airways planes are seen parked at the

Kenya Airways planes are seen parked at the Jomo Kenyatta International Airport in Nairobi on November 6, 2019. PHOTO | REUTERS
In Summary
• So far, the airline’s management says KQ has already lost an estimated $100 million due to the pandemic which forced the country to suspend international flights on March 25.
• The suspension of passenger flights in March badly exposed the airline, which sources a bulk of its revenue from passenger services forcing it rely on cargo services which accounts for a paltry 10 per cent of its revenues.
• KQ says it hopes to return to the skies in July, when the suspension of international flight into and out of Kenya is expected to be lifted, but the return to the skies will be “cautious and selective”.

VICTOR KIPROP

By VICTOR KIPROP
More by this Author

Kenya Airways could lose up to $500 million in revenues by the end of this year, due to disruptions associated with the coronavirus, which has grounded the airline's passenger operations.

So far, the airline’s management says KQ has already lost an estimated $100 million due to the pandemic which forced the country to suspend international flights on March 25.

“We don’t have the full picture of how much we have lost, but our estimates are since January to date we have probably lost in terms of revenue in excess of $100 million,” the airline’s Chief Executive Officer Allan Kilavuka said after an Annual General Meeting yesterday.

“When we estimate to the end of the year, we will lose between $400 million and $500 million”

Going concern
The suspension of passenger flights in March badly exposed the airline, which sources a bulk of its revenue from passenger services forcing it rely on cargo services which accounts for a paltry 10 per cent of its revenues.

“Our plea now is to be allowed to fly as soon as possible to mitigate these losses, because there is a limit to how much loss you can carry and continue to be a going concern,” said Michael Joseph, the carrier’s chairman.

Kenya’s Ministry of Transport and aviation stakeholders have been developing new protocols to guide the safe resumption of local and international air transport services, which are now said to be ready.

KQ says it hopes to return to the skies in July, when the suspension of international flight into and out of Kenya is expected to be lifted, but the return to the skies will be “cautious and selective”.

“It won’t be the same routes or frequency or before, but we are yet to finally decide and publicise which those routes are. The thing is we have to be careful about how we start flying,” Mr Joseph said.

The expected significant revenue losses from the grounding of the airline’s main operations for more than three months are likely to bring more turbulence to the airline’s already troubled operations.

Saviour Bill
Earlier this month, the financially struggling carrier reported a $130 million full-year loss extending a string of back-to-back losses that have forced the government to consider re-nationalising the airline to save it from collapse.

A Bill that will guide the plan to hand back the full ownership of KQ to the government was finally tabled before Parliament on Thursday, after a near three-month delay occasioned by the coronavirus pandemic.

“It is a complex process and not just nationalisation. It is also a question of how we deal with minority shareholders. All these still remain to be finalised,” Mr Joseph said.

“We wanted to have to complete by August we will probably complete later than that,” he added.

Re-nationalisation
The Kenyan government remains the largest shareholder in the airline controlling is 48.9 per cent stake, 38.1 per cent is owned by lenders who converted their debt to equity in 2017, while 7.8 per cent is held by Air France-KLM.

Under the re-nationalisation plan, Kenya Airways, Kenya Airports Authority and the Kenyatta International Airport will be become subsidiaries in an Aviation Holding Company in a plan the government says will help the country’s aviation assets to complement each other.

“We want these aviation assets to talk with each other not to each other,” the parliamentary Transport committee chair David Pkosing said one month ago.

KQ forecasts $500m revenue loss by December
 

Britam posts record loss of Sh9bn after asset division hit​

THURSDAY APRIL 29 2021
ken

Britam Asset Managers chief executive Kenneth Kaniu. FILE PHOTO | NMG

Britam Holdings reported a record net loss of Sh9.1 billion in the year ended December when its asset management division underperformed.

The insurer had made a net profit of Sh3.5 billion a year earlier. The performance saw the company suspend dividend payouts, having made a distribution of Sh630.8 million or Sh0.25 per share the year before.

“The results were further depressed by a provision for investment losses of Sh5.2 billion in Wealth Fund Management Fund LLP, a fund managed by Britam Asset Managers which is a fully owned subsidiary of Britam Holdings Plc,” the Nairobi Securities Exchange-listed firm said in a statement.

“The holdings company is committed to supporting the fund to fulfil its obligations as they fall due through oversight of the fund’s operations and the agreed recovery plan."

The company did not give details of what went wrong at the asset management unit. It, however, indicates that it is willing to absorb some of the losses to protect clients who invested in the fund.

It was not immediately clear how much money the fund was managing and the assets in which it is invested.

The disclosure of the losses at the fund came after the insurer overhauled its executive and board, including the investment committee, giving it an opportunity to look at issues that may have been glossed over in the past.

The company appointed Zimbabwean Tavaziva Madzinga as its chief executive effective February 1, replacing Benson Wairegi who had been with the insurer for 40 years.

The company also replaced its former chairman, Andrew Hollas, on the same day with Mohamed Said Karama on a temporary basis.

Besides the troubles at the fund, Britam also took a hit from a drop in the value of its listed equities and property investments.

"Of this loss, Sh2.3 billion related to a fair valuation loss due to poor equities performance and Sh2 billion related to property impairments," the insurer said.

www.businessdailyafrica.com

Britam posts record loss of Sh9bn after asset division hit

The disclosure of the losses at the fund came after the insurer overhauled its executive and board, including the investment committee.
www.businessdailyafrica.com www.businessdailyafrica.com

The insurer plans to sell its 48.2 percent stake in HF to one of the country’s big banks as part of a review of its investment portfolio.

Britam said that its core insurance business was resilient in the review period.

"However, operating results were better than 2019. Our gross earned premiums (GEP) and fund management fees was up 4.2 percent to Sh28.8 billion from Sh27.7 billion," the insurer said.

"This is attributed to the growth of our insurance revenues especially the international general insurance business which recorded an increase in GEP of 50 percent, contributing 28 per cent of the group’s GEP and a profit before tax of Sh832 million up from Sh38 million in 2019."

Britam recently eliminated nine top executive positions or nearly half of its management team as the new CEO led a shake-up of the top deck of the Nairobi bourse-listed firm.
 

TransCentury banks on $48m cash fix​

theeastafrican.co.ke/tea/business/transcentury-banks-on-48m-cash-fix-3502546

Saturday August 07 2021​

Non-operating assets

According to the report, the Group is also in the process of disposing some of its non-operating assets with a view of raising Ksh843 million ($7.8 million) to shore up its cashflow position. PHOTO | FILE

​

Summary​

  • In May, TransCentury made a U-turn on its earlier plans to delist from the Nairobi bourse arguing that it had found a better option of raising additional capital.

General Image

By JAMES ANYANZWA
More by this Author
Regional infrastructure investment firm TransCentury Plc, is depending on its shareholders to inject an addition Ksh4.4 billion ($40.74 million) of new capital through a cash call in less than two months and a further Ksh843 million ($7.8 million) through the sale of non-core assets to avert a potential liquidity crisis that could adversely impact its operations as a “going concern.”

The loss-making firm, which is listed on the Nairobi Securities Exchange (NSE) with operations across East, Central and Southern Africa, revealed through its delayed annual report for 2019 that it has embarked on a fundraising initiative to raise up to Ksh4.4 billion ($40 million) by a way of rights issue in which the major shareholder — Kuramo Capital Management LLC — has committed to further invest up to an amount of Ksh1.1 billion ($10 million).

The transaction is expected to be concluded in the third quarter (July-September) of this year subject to shareholder and regulatory approvals.

“Kuramo Capital Management LLC, on behalf of its advised funds, has indicated through a letter of intent, their willingness to support the fundraising process by subscribing to its pro-rata 25 percent rights up to an amount of Ksh1.1 billion ($10 million) subject to the shareholders’ approval and required regulatory approvals,” said the report.

In 2017, the American private equity fund Kuramo Capital, commonly referred to as the Kuramo Africa Opportunity Kenya Vehicle Ltd acquired 24.99 percent stake in the troubled infrastructure investment firm in a deal estimated to be worth Ksh2 billion ($18.51 million).

According to the report, the Group is also in the process of disposing some of its non-operating assets with a view of raising Ksh843 million ($7.8 million) to shore up its cashflow position. These assets include parcels of land and houses owned by the Group’s subsidiaries in Kenya, Uganda and South Africa.

The report added that the group through its subsidiary AEA Ltd (formerly Avery East Africa Ltd) renegotiated and received an offer letter on September 4, 2020 from Equity Bank for a 10-year loan facility of Ksh1.06 billion ($9.81 million) to help AEA Ltd acquire assets of another subsidiary, Civicon Kenya. The funds would be used to pay off the existing short-term loan in Civicon books due to the same lender (Equity Bank).

The new facility has a moratorium of 12 months on principals and interest and the management are in the process of negotiating an extension of the moratorium from 12 months to 24 months.

‘The directors are aware that a material uncertainty exists, which may cast significant doubt about the Group and Company’s ability to continue as a going concern and, therefore that the Group and/or Company may be unable to realise their assets and discharge their liabilities in the normal course of business,” the report said.

In 2019, the Group had outstanding loans amounting to Ksh3.43 billion ($31.75 million) for which it had breached the loan covenants with the lender, prompting one of the lenders (Equity Bank Kenya Ltd) to issue a demand letter to the Company on October 14, 2019 with respect to amounts of Ksh1.4 billion ($13.58 million) that were overdue as at October 8, 2019.

In May, TransCentury made a U-turn on its earlier plans to delist from the Nairobi bourse arguing that it had found a better option of raising additional capital from the existing shareholders. The group’s chief executive Nganga Njiinu said the firm is seeking to issue two billion new shares in the ratio of five new shares for every two held.

Last year, the firm announced that it needed to exit the NSE to access new capital from private equity funds that will only invest in it as a non-listed business. TCL has invested in nine operating subsidiaries offering various products and services within the infrastructure sector.

These include electrical cables and conductors, transformers, switchgear and related electrical control equipment, all within the Power Division, and engineering, procurement and construction services within the Engineering Division.

The group increased its losses to Ksh3.93 billion ($36.38 million)in 2019 from a loss of Ksh3.5 billion ($32.4 million) in 2018, with its negative working capital reducing slightly to Ksh10.89 billion($100.83 million) from Ksh11.16 billion ($103.33 million) in the same period.

In 2017, the firm announced a five-year strategy (2018-2022) focusing on fund-raising and debt reprofiling to match cashflows.
 
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