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TransCentury has been bared from dealing with funds raised through the recently concluded Sh2 billion rights issue until a suit pending a suit it filed in court challenging receivership.
Commercial court judge Alfred Mabeya on Monday issued the order after Equity Bank through Lawyer Kiragu Kimani said they were apprehensive TransCentury will dispose of its assets and funds, especially those raised in the recently concluded rights issue.
He however said TransCentury will be permitted to operate other accounts other than that held at Cooperative Bank purely for purposes of running its operations.
“The foregoing order will permit TransCentury to undertake the major contracts that it has with third parties provided that any funds received therefrom shall firstly be applied towards settling statutory liabilities.The principal aim should be to settle the huge debt owed to equity bank,” said the Judge.
Some of the projects valued at over Sh4 billion are in Kenya, Tanzania, Uganda, DRC and Zambia. Most are at an advanced stage, and others have been finalised and are just pending inspection and approval.
The judge further directed the firm to keep the bank notified of any major undertakings through its advocate Philip Nyachoti. All steps required to be taken for insolvency were equally suspended until further orders of the court.
Equity Bank placed TransCentury under receivership over a disputed debt of Sh5 billion. It appointed George Weru and Muniu Thoithi of consultancy firm PriceWaterHouseCoopers as receiver managers.
TransCentury in turn rushed to court on June 18 to obtain an order suspending the receivership. The order was granted therefore returning the control of the firm back to the directors and shareholders.
The firm had indicated that it is in the process of finalising a rights issue intended to raise Sh2 billion. Proceeds from the rights issue were expected to be applied to settle debts owed to creditors.
But Equity, in a new application to set aside the June 18 orders, disputed the statement saying the rights issue was concluded in April this year and the shares began trading at the Nairobi stock exchange on April 26 following approval by the Capital Markets Authority.
It accused the firm of failing to disclose some material facts when obtaining the orders issued on June 18.
“While the parties have been in discussions on the settlement of the outstanding debt, TransCentury has not presented any acceptable proposal to us. It has only sought further financing and a lengthy payment moratorium which was unacceptable to us,” said Equity.
But TransCentury denies withholding information or not coming to court with clean hands. Nyachoti said negotiations regarding the debt were ongoing at the time the bank appointed the managers and the exact amount owing to equity had not been ascertained.
The case will be mentioned on July 4 for further directions.
The dispute between the two dates back to 2013 when the bank advanced a Sh12.1 billion loan to the company between June 2013 and November 2014.
BY THE STAR