Centum opts out of Rift Valley Railways
Three years after the granting of the concession, RVR’s performance has failed to live up to expectation. Photo/FILE
In what seems like throwing in the towel, investments firm Centum Ltd is opting out of the Rift Valley Railways ownership.
It has, through offering its 10 per cent stake to other shareholders at Sh342 million, thought it wise to look for other investment alternatives.
In a letter to the Nairobi Stock Exchange, the company said that it had given the other owners a pre-emptive offer for the stake.
The move has been approved by RVR board and is said to be in line with the firm’s (Centum) investment strategy.
Centums’s stake in the rail company has been its Achilles Heels over the last two years, as it has been forced to factor in a write down on earnings.
Early in the month, it announced a profit warning for its financial year ending March 31, 2009.
In the previous year, it was forced to take the same route after an impairment of the RVR holding
The over 70 per cent decline in profit, it noted, was as a result of the shortfall related to reduced selling at the NSE and its Sh294 million write down on its investment in RVR.
“Together, the two areas are expected to reduce the total profit after tax,” the company said in a statement.
New shape
As a result of the poor performance in the rail company, the Centum was forced to mark down the value of this investment by 84 per cent, which translates to Sh294 million against its profit.
Against the backdrop of the offer, Centum’s share price at the bourse remained relatively stable closing the day at an average of Sh13.40.
A total of 17,300 shares were traded in the week’s opening of day of business.
With the offer, the shareholding structure of RVR will once again take a new shape after a protracted boardroom struggle was resolved last week.
The two leading investors Citadel, an Egyptian equity firm and Transcentury currently hold a 51 per cent and 34 per cent stake respectively.
The move by the investment firm could as well be linked to its precarious position in the new shareholding structure.
Although the deal crafted in London with the backing of International Finance Corporation is to be sealed in April, it did not mention Centum.
In a joint statement, Citadel and Transcentury outlined the structure as 51 per cent to Ambience Ventures Ltd, 34 per cent to Trans-Century and 15 per cent to the Ugandan investor.
