The Capital Markets Authority (CMA) has granted approval to Centum Real Estate (Centum Re) to issue secured zero-coupon and secured zero-coupon equity-linked Medium-Term Notes of Kshs4 billion, with a green shoe option of Kshs2 billion. The offer, a restricted issue, targets sophisticated investors who are sufficiently versed with the risks associated with the notes, in line with Section 30(b) of the Capital Markets Act.
The notes have a tenor of three years. Proceeds from the issue will be used to fund real estate development by Centum Re, a subsidiary of Centum Investment Company. The senior secured zero-coupon notes will attract an indicative interest rate of 12.5 percent whereas the senior secured zero-coupon equity-linked notes will generate an indicative interest rate of 12 percent. The senior secured zero-coupon equity-linked notes comprise an additional 200 basis points over and above the interest rate, subject to the Issuer meeting a minimum project internal rate of return of 20% on at least two of the projects financed by the Notes.
Following review of the lender’s information memorandum, the Authority is satisfied that Centum Re makes adequate disclosure of material information in accordance with the requirements of the Capital Markets Act, the Second Schedule and Part C of the Third Schedule to the Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations, 2002, to enable investors make an informed decision on the offer.
The issuer has been assigned a short-term credit rating of A2 and a long-term rating of BBB+ from Global Credit Rating Company Limited, according to a statement on its short form prospectus.
