Share prices of TransCentury and its subsidiary East African Cables fell on Friday after Equity Bank moved to seize control of the two companies on account of unpaid debt of Sh4.74 billion, spooking investors.
TransCentury shed 6.7 percent to close the day at Sh1.12 per share, while East African Cables was down 1.2 percent to Sh1.71 per share. TransCentury saw 493,600 shares change hands on the day, an increase from 14,900 shares in the previous session.
Despite the decline on Friday and the threat of going under receivership, the two companies’ shares remain among the top performers at the NSE with year-to-date price gains of 187.2 percent for TransCentury and 58.3 percent for East African Cables.
The two are among a number of small cap stocks whose low nominal prices have attracted retail investors who are hoping to ride on the general price recovery across the stock market, which has added Sh355.1 billion in investor wealth since the beginning of this year.
On Thursday, Equity sought to take control of properties associated with the two firms in Nairobi’s Lavington and Industrial Area.
The bank was able to access East African Cables’ facility in the Industrial Area and take control of operations, but TransCentury managed to block the seizure of its property in Lavington after Equity’s appointed receivers were locked out.
The debt in question comprises Sh2.8 billion owed by TransCentury and another Sh1.95 billion owed by East African Cables.
Equity issued a demand notice for the debt in June 2023, and later moved to place the two companies under receivership after declining a request to write off the dues.
But a High Court judge blocked the receiver managers from taking over the two companies in a relief window which lapsed on Wednesday, triggering the new efforts to seize the firms.
In a statement issued on Thursday, TransCentury said that it had made progress in its debt restructuring plan, including taking initiatives to settle the debt with potential investors.
“We are fully engaged in a court-supervised process and are working closely with all relevant stakeholders, including our creditors and potential financiers, to ensure a sustainable and mutually beneficial outcome,” said TransCentury.
The company added that it had in the meantime filed an application in court on June 16 concerning the Equity debt, with the parties having been directed to appear before court on Friday last week.
Despite the debt woes that threaten its ability to remain in operation, TransCentury reported a net profit of Sh579.9 million for the year ended December 2024, compared to a net loss of Sh3.23 billion a year earlier.
The reversal was largely attributed to a stronger shilling in the forex market that handed the company an exchange gain of Sh1.23 billion last year, compared to a loss of Sh1.49 billion in 2023. The gain was complemented by an increase in revenue to Sh6.7 billion from Sh6.57 billion in 2023, while also cutting the cost of sales from Sh4.7 billion to Sh4.35 billion.
