East African Cables set to sell its subsidiary in Tanzania
The East African Cables has announced the sale of 16,218,000 shares to Msufini, a Tanzanian company.
The shares constitute 51 per cent of the issued share capital of East African Cables (Tanzania) Limited, the company's Tanzanian subsidiary.
Upon completion of the sale, East African Cables Tanzania will cease being a subsidiary of the mother company, the East African Cables.
"East African Cables hereby announces for the benefit of its shareholders and the investing public that it has entered into a share purchase agreement with Msufini (T) Limited (Msufini) on 6 March 2024 for the sale of 16,218,000 ordinary shares with a par value of TZS 10 (Tanzania Shillings ten), constituting 51% of the issued share capital of East African Cables (Tanzania) Limited, to Msufini," the company said in a public notice.
The shares will cost approximately Ksh9.1 million.
East African Cables Tanzania is a private limited liability company incorporated in mainland Tanzania which manufactures an extensive range of cables for domestic and industrial lighting applications, as well as transmission and distribution of electricity.
Msufini is a private limited liability company incorporated in mainland Tanzania, whose primary business is the manufacture and sale of water treatment chemicals in Tanzania.
"The Sale is subject to conditions that are customary to transactions of this nature, including receipt of EAC Plc shareholders' approval and regulatory approvals. Upon completion of the Sale, EAC Tanzania will cease being a subsidiary of the Company," the notice added.
East African Cables administration
This comes months after East African Cables obtained a court injunction against an administration notice dated June 16, 2023, issued by Equity Bank to appoint an administrator.
The injunction was issued on the basis that the bank appointed an administrator while the parties were engaged in negotiations.
“I am glad that the brief setback that this unfortunate action had brought to the business is behind us and we can now focus on what we do best, providing quality cables to our customers across the region," company executive Dr M G Waweru said in June 2023.
"We have been on what we viewed as positive discussions with the bank up until a day before the appointment of the administrator, therefore the extreme and unfortunate action taken by the bank came to us as a surprise. EAC is a renowned and astute business and we’ve been committed to meeting our obligations and continue to do so despite the prevailing challenging macro environment."
The injunction put a stop to the appointment of an administrator and restrained them or their agents from performing any actions in the capacity of a company administrator.
“East African Cables is the undisputed number one cable brand in the region, we have built an admired brand that is powering nearly all homesteads, factories, streets in this country and beyond. We are delighted to resume serving our customers in every corner of our country,” East African Cables CEO Paul Muigai added.
East African Cables debt
East African Cables, a subsidiary of Transcentury, was placed under administration courtesy of a $34.3 million (Ksh4.8 billion) debt owed to the Equity Bank by the parent company.
The lender had placed Transcentury Group and its subsidiary East Africa Cables Ltd under administration and receivership respectively, after what appeared to be a disagreement on the modalities of settling the debts. East Africa Cables owes TransCentury Ksh1.9 billion.
In the first half of 2023, the company reported a 24 per cent growth in gross profit.
The Earnings Before Income Tax Depreciation and Amortization (EBITDA) significantly improved by 114 per cent, and net earnings increased by 15 per cent, in comparison to the same period in the preceding year.
