Troubled CMC now up for sale

By Jackson Okoth

Nairobi, Kenya: Negotiations are at an advanced stage for a strategic partner to acquire majority shareholding in troubled motor vehicle dealer Cooper Motors Corporation (CMC) Group Limited.

“The firm has already placed a takeover bid and reported its intentions to the Capital Markets Authority as officials at CMC perform due diligence before concluding the deal,” CMC Chief Executive Joel Kibe said.

He made the disclosure Wednesday during a stormy 49th Annual General Meeting, where shareholders protested before finally approving the company’s accounts and financial statements.

Takeover bid

During the acrimonious AGM, top CMC officials assured shareholders that their stake in the firm will not be diluted in the event the takeover bid goes through.

Trading in CMC shares at the Nairobi Securities Exchange has remained suspended indefinitely after a crippling boardroom battle broke out in the firm.

It is nearly certain to lose the Jaguar and Land Rover (JLR) franchise if its case at the Court of Appeal is thrown out.

Last year, CMC made a pre-tax profit of Sh231 million compared to a pre-tax loss of Sh209 million the previous year against a hostile environment of bitter boardroom wrangles and negative publicity as well as numerous court cases.

Shareholders had refused to approve the 2011 and 2012 accounts, alleging lack of adequate disclosures on the firm’s hidden offshore accounts in Jersey. However, they were prevailed upon to do so as refusal to approve accounts and conclude the AGM agenda would have had dire consequences for the firm.

“The CMA will not lift suspension on CMC share trading nor suppliers give us any new business and banks fresh credit if these accounts are not approved,” CMC’s acting Group MD Mary Ngige told the furious shareholders.

CMC added that losing the JLR franchise will not dent its profits.

“We still have a cache of 12 franchises and are yet to exploit the opportunities they offer in the three East African countries we operate in,” said Kibe.

CMC, however, is accusing the franchise holders of JLR of being part of a network that had been making undisclosed payments to offshore accounts.

“We have already engaged lawyers who are looking at the offshore accounts question with a view to tracing these funds and remitting them to Kenya,” said Ms Ngige.

Further, the company is still holding 15 dormant subsidiary companies in its books that it is unable to shut down owing to the tax liabilities involved.

“We have engaged the services of tax consultants to help us shut down some of these subsidiaries without incurring huge tax expenses,” she added.