Another loss making Kenyan company part II

Centum's Two Rivers subsidiary to sell stake by April​

MONDAY JANUARY 24 2022​

Centum Chief Executive James Mworia. FILE PHOTO | NMG

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Summary​

• Centum CEO officer James Mworia said the firm has entered talks with several investors interested in taking up a stake in the subsidiary.
• The company is still determining the structure the deal will take, which depending on the valuation agreed with the investors could be in form of a straight equity sale or a convertible instrument.

By CHARLES MWANIKI
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Centum subsidiary Two Rivers Development Limited (TRDL) will sell a stake by April to raise new capital and cut debt.

Centum CEO officer James Mworia said the firm has entered talks with several investors interested in taking up a stake in the subsidiary.

The company is still determining the structure the deal will take, which, depending on the valuation agreed with the investors, could be in form of a straight equity sale or a convertible instrument.

Centum's shareholding may or may not be diluted, depending on how the transaction will be structured.

He, however, declined to disclose the size of stake Centum is looking to sell and the amount they hope to raise, although he had earlier said the proceeds would help retire some of the debt held by TRDL.

“There is investor interest in TRDL because the development rights in the company is entirely serviced with infrastructure and we have been able to validate three different development models ranging from high-end, medium-income and affordable housing,” said Mr Mworia.

“We are engaging with several investors and will hopefully close soon. The target holding post-deal depends on the valuation we agree on and structure, which might either come in as straight equity or a convertible facility. In the next three or four months, we should have a signed agreement.”

Centum currently owns 58 percent of TRDL, with AVIC International holding 39 percent and Kenya Development Corporation three percent.

TRDL in turn holds a 50 percent stake in Two Rivers Lifestyle Centre, which owns the mall and office tower, with Old Mutual Properties owning the other half. Therefore, Centum has an effective stake of 29 percent in the mall and tower complex.

The success of the proposed equity sale deal will therefore dilute Centum’s ownership in both the mall and surrounding housing and land rights developments.

Last month, Centum also said that TRLC would convert a Ksh4.5 billion ($39.6 million) loan into a security that will see an undisclosed lender earn dividends and get a share of the shopping complex if the owners decide to sell it, in a plan to reduce interest expenses.

The debt was part of $96 million secured during the construction of shopping and office complex. The disposal of part of its ownership in TRDL is among several transactions Centum has lined up to raise cash and monetize a section of its assets.

Geza Ulole said:

Resolution Insurance placed under Statutory Management

Resolution Insurance Company Limited has been placed under Statutory Management by the Commissioner of Insurance for a period of 12 months.

www.standardmedia.co.ke

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Your obsession with Kenya is sickening! It only shows how desperate you are bongolala

Geza Ulole said:

Resolution Insurance placed under Statutory Management

Resolution Insurance Company Limited has been placed under Statutory Management by the Commissioner of Insurance for a period of 12 months.

www.standardmedia.co.ke

Click to expand...

keep the thread going!

Unga Group mulls abandoning grain milling business​

SUNDAY DECEMBER 11 2022​

An attendant arranges packets of maize flour at a supermarket in Kenya. Unga Group Holdings Ltd is considering abandoning grain milling business for a general food company after more than 110 years of operations. PHOTO | FILE | NMG



By JAMES ANYANZWA
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Unga Group Holdings Ltd is considering abandoning grain milling business for a general food company after more than 110 years of operations.

The firm is grappling with falling revenues precipitated by rising competition in the milling business, falling demand for its products and the high cost of raw materials.


The regional flour miller, which is listed on the Nairobi Securities Exchange (NSE), revealed through its latest integrated report that it is working on a transition into a general food company to secure the future of the business.

“Looking ahead, we have observed changing consumer purchasing habits, particularly among younger consumers who prefer convenient, nutritious foods that are easy to prepare while also being health conscious,” said Joseph Choge, the Group’s managing director.

General food outfit​

The group disclosed that a new product development team has been assembled to manage the firm’s transition from a milling outfit to a general food outfit.

According to the report, wheat and maize prices increased during the financial year ended June 30 as a result of poor harvest, weakened local currency and adverse fiscal measures imposed by some of the exporting countries.

In addition, depreciation of the shilling against the dollar impacted importation costs, leading to substantial forex losses.

According to the report, more than 50 new millers have joined the sector over the past two years, resulting in an intensely competitive environment.

“In addition, we continue to be affected by cheap poultry imports from the region and fish from Asia, resulting in condensed market for our animal nutrition products,” reads report.

Economy recovered​

Last year, Kenya’s economy recovered from the crippling effects of the pandemic to expand by 7.5 percent compared with a contraction of 0.3 percent in 2020. The recovery was mainly driven by resumption of most economic activities after the lifting of the containment measures instituted in 2020 to curb the spread of the virus.

However, unfavourable weather conditions continued to constrain the growth of the agricultural sector, with production of maize declining by 12.8 percent to 36.7 million bags in 2021 from 42.1 million bags in 2020

Wheat production declined by 39.4 percent to 245,300 tonnes in 2021 from 405,000 tonnes in 2020 consequently increasing the amount of wheat imported by 6,400 tonnes to 1.89 million tonnes in 2021

Last year, Unga entered into an agreement to sell its bread making business to a logistics firm BigCold Kenya after branding the bakery business “unsustainable”.



MY TAKE
Pembe flour milling is next!