Centum Investments can breathe easy after repaying the Ksh16.14 billion ($161.4 million) debt which had, in the past five years, affected its cash flow and eroded shareholder earnings, restricting its options for new debt for growth and investments.
“As we enter the economic recovery cycle, Centum’s strong liquidity and balance sheet position has put it in a strong position to take advantage of investment opportunities that will emerge given the significant corrections that have taken place on valuations of even very strong companies, and the growing need by companies to shore up their equity capital positions and the general capital flight from frontier and emerging markets to developed markets.”
With the debt out of the way, the company expects to use the excess cash to boost its shareholder kitty and buy back its shares.
The huge debt on Centum’s balance sheet had weakened the firm’s debt-service coverage ratio, a measurement of the cash flow available to pay current debt obligations, to a low of 1.7x in 2019 from a high of 9.3x in 2015.
Last June, Centum suspended further capital expenditure and put key investments on sale as part of a grand plan to pay off mounting debts amid a shaky cash flow position and deteriorating debt-coverage ratio.
