An administrator appointed by Equity Bank on Thursday took control of East African Cables but its parent firm TransCentury managed to block seizure by the bank, which was enforcing its claim of Sh4.74 billion that the two firms have defaulted on.
Equity failed in its bid to take over control of a property associated with investment firm TransCentury in Nairobi’s Lavington neighbourhood, after the lender’s appointed receivers were locked out of the premises by the entrance guard.
Mr Muniu Thoithi, who’s acting as one of the two receivers appointed by Equity, was informed by the guard that the compound has been deserted by workers starting Wednesday, with firm instructions that no one should be allowed in.
The Business Daily team, which was on site at the time, could also not be granted access to the premises – which serves as TransCentury’s head office – with the security warden declining to answer questions.
At the centre of the dispute is a Sh2.8 billion debt owed to the listed lender by TransCentury and another Sh1.948 billion owed by the latter’s subsidiary East African Cables.
Equity placed the two troubled firms under receivership after declining a request to write off the dues owed, before a High Court judge blocked the receiver managers from taking over control of the entities in a relief window that lapsed on Wednesday.
Mr Thoithi told this publication that he had moved to occupy the Lavington premises after TransCentury failed to comply with the loan settlement agreement reached, and following the expiry of the breathing space extended by court.
“I just came here to do my duty in compliance with the court directive. I did not anticipate that the other party would fail to cooperate and that’s why I didn’t bring with me any enforcement measures,” he said.
“I’ll, however, consult our legal teams to decide on what options we have and what action we’ll have to take,” he added.
At the East African Cables, Equity Bank agents stormed its headquarters in Nairobi’s Industrial Area on Thursday morning, taking control of operations. Other agents were dispatched to the firm’s premises along Kitui Road, Industrial Area.
A source engaged in the process told the Business Daily that the administrator took over running of the company from its top management.
“The administrator, Mr George Weru, has gained access to the premises and has taken over running of the company from its management. He is firmly on the ground.
“As we speak, the current management of East African Cables as it were ceases to have any control of the company,” source said, while noting that other creditors had been notified.
Equity agents had appeared at the East African Cable’s premises prepared for every eventuality, including tagging along a security team in the event the process turned ugly.
At the company’s headquarters’ gate, security guards were cagey and could not provide any information.
The lender’s action follows a Court of Appeal decision last month declining to grant orders stopping it from selling four properties the company used as collateral for the loan.
In November last year, Equity served East African Cables with three statutory notices to fully repay the debt, prompting the company to rush to the High Court for rescue.
The High Court, however, rejected the company’s challenge to the statutory notices which forced it to rush before the court of appeal.
“The ability of the bank, a tier one bank, to pay the damages is not doubted and there can be no reason to hold it back from exercising its statutory power of sale even in circumstances where the debt is contested,” justices Jamila Mohammed, Francis Tuiyott and Pauline Nyamweya ruled last month.
TransCentury, on its part, issued a statement later yesterday indicating that it had made ‘significant’ progress in its debt restructuring plan, adding that it has filed an application in court with directions for parties to appear in court today.
“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,” said the firm.
“We wish to affirm that the Group remains committed to resolving this matter in a constructive and lawful manner. 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.”
