CMA Approves Re-opening of TransCentury Plc Right Issue

The Capital Markets Authority (CMA) has approved TransCentury Plc to re-open the right issue offer period from March 20th to 31st, 2023.

This allows the company to seek shareholders’ approval to enable the conversion of shareholder loans to ordinary shares as a mode of payment for rights.

The re-opening follows the rights issue of raising KES 2.063 billion, where a minimum of 50% of the rights were required for the rights issue to be declared successful. However, it did not meet its target and fell short of the success threshold of 50%, which is KES 1.03 billion.

TransCentury was granted approval for a rights issue on November 15th, 2022, in which the firm planned to issue 1,876,013,830 new shares at KES 1.10 each. The proceeds from the rights issue were intended to be used for debt settlement, repayment of a portion of the holding company’s debt, and financing an audit to release the 2021 earnings. However, the release of the financial statements for the year ended December 2021 was a critical factor that had not yet been completed. The financial statements were due for submission and publication on April 30th, 2022, and part of the proceeds from the rights issue was set aside to fund the audit and prepare for their release.

On December 21st 2022, Kuramo Capital invested up to KES 1.1 billion ($10m) in TransCentury’s ongoing rights issue, which increased its stake in the company to over 48%. Kuramo owned 25% of the infrastructure investment firm.

Moreover, shareholders of TransCentury were given until January 23rd, 2023, to purchase the new shares at KES 1.10 each, and the outcome of the rights issue was scheduled to be announced on February 9th, 2023. However, on January 24th, the board extended the deadline for the rights issue to February 3rd.

Unfortunately, the rights issue performed below expectations, and as a result, the Capital Markets Authority (CMA) has invoked its powers under Section 14 of the Public Offers & Listings Regulations to allow TransCentury to reopen the issue. The hope is that more shareholders will take up their rights and raise more capital.