Investors inject Sh63bn to save RVR deal

• Sh156m paid to Kenya and Sh78m to Uganda in late concession fees

Shareholders of the troubled Rift Valley Railways – the company running the Kenya-Uganda rail line – have injected about Sh63 billion into the firm.

Details of the capital injection are still scanty, but the Nation has confirmed that all the shareholders took part in a rights issue approved by the company’s board last October. Only Babcock Brown of Australia was yet to comply.

The Nation also learnt that RVR had by last Friday paid the governments of Kenya and Uganda Sh156 million ($2 million) and Sh78 million ($1 million) in outstanding concession fees.

The payment was the latest sign of the shareholders’ determination to save the now wobbly 25-year concession.

Under the rights issue, the shareholders must put in another $10 million (Sh750 million) by March 10.

According to the board’s plan, proceeds from this second capital call will be spent in maintenance of the company’s locomotives.

There were fears that plans by shareholders to inject capital would not succeed after one of the investors, the influential TransCentury group, filed an injunction in the High Court of Mauritius seeking ex parte orders to block the rights issue.

But, the court declined to grant TransCentury the injunction, instead ordering inter-party hearings that are scheduled to start this week.

With fears that it risked its shares being diluted, TransCentury last week moved quickly and put in money to pay for their rights.

It now remains to be seen how the $10 million capital injection will mean to the battle for control of RVR – pitting TransCentury and wealthy Egyptian equity fund, Citadel Capital Ltd.

The fight by the Egyptians to gain a foothold into the boardroom of RVR has precipitated an explosive tussle that has divided shareholders of the company.

Face stern action

On paper, the single largest of last week’s capital injection – about $3.2 million – was by Sheltam Rail Company of South Africa, the biggest shareholder with a 35 per cent stake in RVR.

However, it is an open secret that the money came from the Egyptians who recently purchased 49 per cent of Sheltam Rail from South African Roy Puffet in a deal whose legality has been challenged by the government of Kenya but which has been endorsed by Kampala.

The controversy is expected to move to a decisive stage on Monday during a meeting of the Joint Railway Commission, the inter- ministerial committee of representatives of Uganda and Kenya, which has been dealing with the troubled concession.