Centum Investment Company will be redeeming a total of 4,3 billion shillings to repay a corporate bond in full upon maturity on September 18th, 2017.
The offering resulted in significant value uplift for investors in the notes.
In a statement, the firm said that investors in the ELN will receive an additional 191 million shillings, representing a total equity upside of 15 percent of the par value in line with the terms of the issue, which translates to an annual internal rate of return of 14.9 percent for ELN investors.
The Company said that considering shareholders at the point of the issue, the firm’s share price was at 11.75 shillings as compared to a current share price of 41.75 shillings, which represents an annual internal rate of return of 31 percent and a cumulative return of 275 percent inclusive of dividends declared during the period.
“Centum would like to thank the investors in its corporate issue, the Nairobi Securities Exchange and the Capital Markets Authority for making this milestone investment possible, and is proud of having established a track record of successfully raising capital from the debt markets, as well as retiring the debt in full on maturity,” Read the statement.
In addition to the redemption of its corporate bond, the firm noted that it had retired its 3-billion-shilling facility from Rand Merchant Bank (RMB) which was set to mature in December 2017.
The Group has subsequently obtained a 5-billion-shilling facility from RMB which matures over a 4-year period.
The net impact of these movements is that Centum has repaid in full the 7.2 billion shillings of maturing debt that was falling due in 2017.
The Company has therefore deleveraged, with long term debt decreasing from 13.3 billion shillings as at 31st March 2017 to 11 billion shillings, comprising the 6.0 billion shillings’ bond maturing in 2020 and the 5 billion shillings’ facility from RMB.
James Mworia, the Group Chief Executive Officer, said that they were pleased to have delivered on their promise to investors and were satisfied with the returns that the company had generated for all their categories of investors adding that the support of their investors had made it possible for the firm to significantly transform.
“In 2012 when the Company issued the bond it had a total asset base of 15 Billion shillings which has grown 4x to 61.5 Billion shillings today. The Centum share price is still trading at a significant discount to the NAV per share and this presents further scope for generation of returns for our shareholders,” said James Mworia.
Centum’s business outlook, according to the CEO, is very positive, with the business at a point in its maturity where they expect to generate significantly higher cash flows going forward and rely less on third party borrowings.
“We also have a robust pipeline of attractive proprietary investment opportunities that we have developed over the last three years and which we will invest in largely using internally generated funds. The ability of the business to repay more than 7.2 billion shillings in the midst of a difficult year and still fund significant investments is testament to its strength,” noted Mworia