TransCentury Suffers Legal Setback in Sh2.2 Billion Loan Dispute with Equity Bank
The High Court has declined to block Equity Bank from taking over troubled investment firm TransCentury Ltd, dealing a blow to the company in its Sh2.2 billion loan battle.
Justice Francis Gikonyo ruled that receiver managers appointed by the bank could proceed with their takeover, and instead scheduled a hearing for next month. This came even as TransCentury said it had made significant strides toward settling the debt through incoming investor funds.
In a statement, the company noted: “The Group has made significant progress in its debt restructuring plan, which includes initiatives to settle the debt with potential investors. We are confident that the progress made, which is at the tail end, will yield a resolution that’s in the interests of our shareholders, financiers, employees, partners, and the broader market.”
TransCentury and its subsidiary East Africa Cables had challenged the appointment of George Weru and Muniu Thoithi as receiver managers, arguing the move was unfair and premature.
East Africa Cables separately moved to the Court of Appeal after another High Court judge, Justice Wayua Mong’are, declined to halt the sale of a property used to secure the loan. The firm’s Managing Director, Paul Muigai, warned the appeal would be meaningless if the bank succeeded in disposing of the property.
Equity’s legal officer, Kariuki King’ori, countered that the firm had acknowledged owing Sh2.2 billion and had been issued with three statutory notices regarding loan default. He argued that the appeal lacked merit and that damages would be an appropriate remedy if the appeal eventually succeeded.
In total, Equity is pursuing Sh4.8 billion from the two companies — Sh2.8 billion from TransCentury and Sh2.2 billion from East Africa Cables.
In a separate development, the same court had earlier issued a 90-day order barring the bank from appointing receiver managers or liquidating the firms, to allow them time to secure funds and service the debt.
Representing the firms, lawyer Phillip Nyachoti told the court that TLG Africa Growth Impact Fund (Cayman) Ltd had committed to pay off the debts amounting to USD 8 million (approximately Sh1.034 billion). He noted that TransCentury and East Africa Cables had already repaid Sh618 million and were in talks with institutions like Access Bank Kenya, Nexis Africa, and Kuramo Capital.
Nyachoti insisted that appointing receiver managers at this stage would paralyze ongoing major infrastructure projects and pleaded with the court to allow directors access to company assets and offices.
Equity Bank appointed Weru and Thoithi as receiver managers in 2023, but the legal battles have continued amid efforts by the companies to restructure and attract new financing.
TransCentury is an infrastructure investment firm with a portfolio spanning energy, transport, water, agriculture, and industrial technologies.
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TransCentury Suffers Legal Setback in Sh2.2 Billion Loan Dispute with Equity Bank