Eveready to pay surprise dividend after plant sale

Eveready East Africa Chairperson Lucy Waithaka (right) and Managing Director Jackson Mutua address journalists after an extraordinary general meeting in Nakuru. [PHOTO: KIPSANG JOSEPH/STANDARD]

Loss-making battery seller Eveready expects to pay a dividend to its shareholders since 2008 after the sale of the firm’s most valued asset based in Nakuru.

Details of the dividends remain scanty. The firm has also announced plans to move its head offices to Nairobi after disposing its dry cell manufacturing plant in Nakuru.

Eveready said it was seeking to buy an acre of land along Nairobi’s Mombasa Road where it will put up new premises  for its head office and distribution centre. “This will complement our retail model and eliminate our property leasing costs,” Eveready Managing Director Jackson Mutua said of the sale and planned acquisition.

He was speaking at a special meeting of shareholders who approved the sale of the 18.5 parcel of land owned by the firm in Nakuru, which hosted the battery manufacturing plant.

Mutua added that the most urgent need for the firm is to settle Sh509 million owed to lenders in loans, letters of credit and stocks.

“We thought it a good thing to pay a dividend because the shareholders have not been paid anything since 2008,” said the MD. The firm expects to sell the Nakuru plant for about Sh1.3 billion, which is the fair price from the most current valuation.

Dilute stakes

Eveready will be joined in disposal of key assets by another listed company, Express Kenya - which is also seeking shareholder approval before the planned sale. Chief executive of the logistics firm Hector Diniz has also been granted 12 million shares, diluting the stakes held by other shareholders by a third.

The additional shares in the company are compensation for Sh60 million-worth of loans extended to Express Kenya by Diniz’s private companies, Airport Trade Centre and Diniz Holdings. Mr Diniz is already a majority shareholder of the company he founded and would after the retirement of the debt control 70.8 per cent stake.

In effect, the other shareholders of the troubled logistics firm will see their collective stake shrink to below 30 per cent. Express Kenya, whose shares are listed at the Nairobi Securities Exchange, has been struggling since losing a lucrative beer distribution and warehousing business to DHL.

Conversion of the loans to equity will however require shareholders’ approval during the annual general meeting to be held later in the month, where another decision to sell part of the company’s land in Nairobi will be considered. “That subject to approval by the shareholders to dispose of the company’s land to partly finance the company’s project and to clear outstanding loans which will improve the company’s working capital,” the company said in a notice to shareholders on Thursday.

Cash generated from financing activities, which would include borrowings, last year was about Sh71 million – most of which was wiped out by the losses as the firm struggled to remain afloat. Diniz, who also owns a flower exporting firm called FlowerWings, would after the debt to equity conversion command a bigger control of the business and profits, if any, generated.

The firm has prime land on Nairobi’s Likoni Road where tens of rusty trucks and containers are still parked after the loss of the distribution business, leading to hundreds of job losses. It had announced plans to develop a high-rise residential housing project, to take advantage of the soaring property value in Nairobi.