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Tale of Transcentury CEO exit, Sh8b Debt
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mlennyma
#11 Posted : Friday, January 22, 2016 8:29:58 PM
Rank: Elder

Joined: 7/21/2010
Posts: 6,194
Location: nairobi
muandiwambeu wrote:
moneydust wrote:
mlennyma wrote:
moneydust wrote:
the_cabal wrote:
moneydust wrote:
the_cabal wrote:
Did Transcentury's long serving CEO throw in the towel upon realization of been unable to offset the approaching maturity of Sh8 billion dollar-denominated convertible bond that is due in two months time?

“I struggle to understand how Trans-Century, a company whose market capi-talisation is Sh2.4 billion, is going to raise Sh8 billion to redeem these deep ‘out of the
money’ convertible bonds,” Aly-Khan Satchu," Shame on you

The meltdown Link.


This is a clear story of what not to do with borrowed money


Bearing in mind that the founders were the Kibaki golf buddies, there could be a similarity of economic/political patronage they enjoyed during that era and now the tables overturned.


I may not dispute the political patronage angle.However, what is very clear is that they put their money into very risky investments which in the end did not bear any fruit.Cash was basically incinerated.

it was not a rehearsal it was a performance, they must pay back


They should just handover the company to the bondholders and hope that they will agree for it to be the final settlement.Anything else does not make sense..including a rights issue

@mlennyma are you ready for this. Someone call nyambane to say it better here, relinquish your shares and then walk home pockets inside out or what? Applause Applause. That is capitalism cannibalism at it best. Russian style.

this could be the first company to close shop this year if the main shareholders dont intervene in good time.
"Don't let the fear of losing be greater than the excitement of winning."
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ndiwe84
#12 Posted : Friday, January 22, 2016 9:06:15 PM
Rank: New-farer

Joined: 1/14/2016
Posts: 12
Location: here and there
So guyz in retrospect what valuable lessons can we learn from Transcentury Company Ltd. and how can future budding investors avoid the pitfalls that befell TCL.
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Kusadikika
#13 Posted : Friday, January 22, 2016 10:32:29 PM
Rank: Elder

Joined: 7/22/2008
Posts: 2,721
ndiwe84 wrote:
So guyz in retrospect what valuable lessons can we learn from Transcentury Company Ltd. and how can future budding investors avoid the pitfalls that befell TCL.



Do not engage in business that requires one or few big customers. You are very vulnerable when he /they change their mind. Transcentury businesses: Cables, KPLC does not buy you are done, Civicon - Exploration slows down you are finished, That Transformer business in Tanzania could only sell to the power company there.

Contrast this with a business like say the Wahindi companies that make mabati or sufurias or stoves. A business with 10 million customers who pay 10 shillings each for a product is safer that a business with 10 customers who pay 10 million each for the product.
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Mike Ock
#14 Posted : Friday, January 22, 2016 10:42:42 PM
Rank: Member

Joined: 1/22/2015
Posts: 682
mlennyma wrote:

this could be the first company to close shop this year if the main shareholders dont intervene in good time.


But at this point haven't main shareholders cashed out significantly? What reason do they have to care?
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guru me
#15 Posted : Friday, January 22, 2016 10:48:17 PM
Rank: New-farer

Joined: 6/27/2011
Posts: 63
ndiwe84 wrote:
So guyz in retrospect what valuable lessons can we learn from Transcentury Company Ltd. and how can future budding investors avoid the pitfalls that befell TCL.



Do not build your business predicated on patronage or other factors you cannot control.
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murchr
#16 Posted : Friday, January 22, 2016 11:26:45 PM
Rank: Elder

Joined: 2/26/2012
Posts: 15,980
Kusadikika wrote:
ndiwe84 wrote:
So guyz in retrospect what valuable lessons can we learn from Transcentury Company Ltd. and how can future budding investors avoid the pitfalls that befell TCL.



Do not engage in business that requires one or few big customers. You are very vulnerable when he /they change their mind. Transcentury businesses: Cables, KPLC does not buy you are done, Civicon - Exploration slows down you are finished, That Transformer business in Tanzania could only sell to the power company there.

Contrast this with a business like say the Wahindi companies that make mabati or sufurias or stoves. A business with 10 million customers who pay 10 shillings each for a product is safer that a business with 10 customers who pay 10 million each for the product.


Apart from Cables, the others business should be good. Biggest issue here is they took a USD 80 million Euro bond 2011 that they need to pay up, then after they were kicked out of RVR, business has never been the same again.
"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
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the deal
#17 Posted : Friday, January 22, 2016 11:51:45 PM
Rank: Elder

Joined: 9/25/2009
Posts: 4,534
Location: Windhoek/Nairobbery
Biggest mistake TCL made was buying Civicon..CEO was young and perhaps overrated ..he failed to read that the Chinese were here & scooping all construction tenders...worse Uhuru was looking East....have TCL not issued that bond to buy civicon they would have been fine....i think they based the decision on a few successful projects...if the business was that good...why were the owners cashing out? ....once made money hyping this stock...after the RVF debacle...I ran away...its a sad story really...TCL should have been the poster child of Kenyan industrilisation...but now we have the chinese...are china & kenya's interests aligned? Same story with eveready....china is the worst enemy for Africa's industrilisation...
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  | | Edit by user: Friday, January 22, 2016 11:54 PM | Reason: Not specified
sparkly
#18 Posted : Saturday, January 23, 2016 8:43:45 AM
Rank: Elder

Joined: 9/23/2009
Posts: 8,083
Location: Enk are Nyirobi
The problem with TC is incompetence of management.

First things first, TC is an investment company. Their returns coming from sale of equity stake in investments, dividends, interest or royalties from know how/ deal making expertise.

Just how they took a KShs 8B loan and spent on RVR & Civicon without profitable exit strategies not beats me.

Just how did they plan to repay the money when they were burning cash in RVR? From dividends from Cables? selling equity stake in cables/Civicon?

Kiuna and his boys were clueless in what an investment company ought to be doing ie identifying investment streams with better than market returns, being diversified and constantly growing the Equity/Net Asset Value
Life is short. Live passionately.
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the_cabal
#19 Posted : Saturday, January 23, 2016 9:04:27 AM
Rank: New-farer

Joined: 11/20/2015
Posts: 16
Location: Iraq
Mike Ock wrote:
mlennyma wrote:

this could be the first company to close shop this year if the main shareholders dont intervene in good time.


But at this point haven't main shareholders cashed out significantly? What reason do they have to care?



Since listing, the company’s top 10 founders, including Mr Mbugua, investment banker Jimnah Mbaru and NSE Chairman Eddy Njoroge have cut their combined stake from 60 per cent to 47
per cent as of November last year. Mr Mbaru, who initially held a 6.24 per cent stake in the firm, has disappeared from TransCentury’s list of top individual owners after trading most of
his holdings.

Going by this trend, seems like the company might be heading into troubled waters which will be difficult to wade out.
Mganga haagizi Mchicha.
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Spikes
#20 Posted : Saturday, January 23, 2016 9:16:52 AM
Rank: Elder

Joined: 9/20/2015
Posts: 2,811
Location: Mombasa
the_cabal wrote:
Mike Ock wrote:
mlennyma wrote:

this could be the first company to close shop this year if the main shareholders dont intervene in good time.


But at this point haven't main shareholders cashed out significantly? What reason do they have to care?



Since listing, the company’s top 10 founders, including Mr Mbugua, investment banker Jimnah Mbaru and NSE Chairman Eddy Njoroge have cut their combined stake from 60 per cent to 47
per cent as of November last year. Mr Mbaru, who initially held a 6.24 per cent stake in the firm, has disappeared from TransCentury’s list of top individual owners after trading most of
his holdings.

Going by this trend, seems like the company might be heading into troubled waters which will be difficult to wade out.


Even if the likes of Dyer and Blair's mogul Jimnah Mbaru has cut his stake demoting him from the list of top Transcentury investors, he is apparently been burnt beyond proper identity before scaling down his holding.
John 5:17 But Jesus replied, “My Father is always working, and so am I.”
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