Five Listed Companies Operating In The Negative: Bankrupt?

Five listed companies at the Nairobi Securities Exchange (NSE) are working with a negative working capital, below the capital prescribed by NSE laws.

According to the Capital Markets Authority, the five companies have to present a working formula on how they are going to recover or they might risk being delisted from NSE.

The five companies are:

1. Trans-Century
2. East African Cables
3. Stanlib Kenya
4. Car and General
5. East African Portland Cement

Trans-Century has not posted any profit since 2013. At the end of 2017, the company’s liabilities were more than the current assets by 9.18 billion shillings. This means that even if the company was sold to pay off debts, creditors would still be asking for 9.18 billion shillings. The management attributed the imbalance on the “re-profiling” of the company’s debt into a long-term tenure.

The East African Cables had not realized any profits since 2015 and its liabilities are more than the current assets by 1.85 billion shillings. The regulation requires the assets of a listed company to be at least 2 times its current liabilities for it to be in a position to meet all the transactional obligations due within a period of 12 months.