East African Cables to sell $809,859 stake in Tanzania subsidiary
Thursday March 07 2024
East African Cables manufacturing plant offices in Industrial Area, Nairobi. PHOTO | DIANA NGILA | NMG
Manufacturer East African Cables is set to dispose of its Tanzanian subsidiary with the sale of its 51 percent stake.
The company says it has entered into a share purchase agreement with Msufini Tanzania Limited, a manufacturer of chlorine and sodium hydroxide in Tanzania.
Msufini is expected to purchase 16.2 million ordinary shares with a par value of 56 cents (Tsh10) each or a total of Ksh9 million ($63,380), which represents 51 percent of the issued share capital of East African Cables Tanzania Limited.
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The manufacturer has not disclosed the value of the transaction but had placed the carrying value of its investment in the Tanzanian unit at Ksh115 million ($809,859) at the end of 2022, according to disclosures in its annual report.
East African Cables purchased 51 percent of the share capital of East African Cables Tanzania Limited in October 2005.
"The sale is subject to conditions that are customary to transactions of this nature, including receipt of shareholder and regulatory approval. Upon the completion of the sale, EAC Tanzania will cease being a subsidiary of the company," the firm said in a statement on Wednesday.
Proceeds from the sale are expected to be deployed in setting the manufacturer on firmer financial footing following its recent troubles.
In June last year, Equity Bank placed East African Cables under administration while its parent firm TransCentury was placed under receivership over a Ksh4.8 billion debt ($34.3 million) debt load.
The bank appointed Muriu Thoithi and George Waweru from PwC as joint administrators of the manufacturer.
Transcentury and East African Cables have been fighting the receivership and administration orders at the High Court.