Centum reveals Sh5bn war chest for Rea Vipingo

Centum Investment has set aside a Sh5 billion cash pile and secured an Sh800 million bank credit line to finance the acquisition of Rea Vipingo Plantantions (RVP).

The cash is adequate to buy out all shares of the sisal producer RVP, even though Centum’s bid will be considered successful if it is accepted by just 25 per cent shareholders of the NSE-listed agricultural firm.

Centum has offered to pay Sh50 for each Rea Vipingo share, while the Robinow brothers, who are currently the company’s majority shareholders through Rea Trading and Rea Holding companies, have offered Sh40.

A third suitor for Rea Vipingo, WWW.Bid Investment Company, has offered yet another competing price of Sh55.

“The Sh5-billion of liquid assets held by Centum will be available to satisfy the cash consideration for acceptances received if the offer is successful,” said Centum Investment in a statement.

The British duo of Rabinow brothers triggered an unprecedented bidding war at the NSE when they announced a takeover bid of Rea Vipingo, which they said they intended to de-list from the bourse.

READ: Centum’s counter-offer sparks bidding war on Rea Vipingo

Centum added that it could also increase its debt should the need arise.

“In addition, Centum has undrawn credit facilities available of up to Sh800 million and has scope to further increase its debt, if necessary, for the satisfaction of consideration,” said the company.

The third bidder for the sisal-growing firm, WWW.Bid Investment Company, on Saturday put out a notice showing that it would consider its bid successful it managed to get more than 25 per cent shareholding of RVP.

“Completion of the take-over offer will be subject to the fulfillment of the following conditions: The offeror receiving acceptances of the competing take-over offer on or prior to the closing date in respect of ordinary shares of RVP, represent more than 25 per cent of the issued shares of RVP,” said the notice.

The 25 per cent success threshold will take account of the shares of the shares already beneficially owned by and registered in the name of the Kenyalogy.Com Limited, with whom Bid Investment is acting in concert.

Kenyalogy.com already owns 836,900, which represent 1.4 per cent of the total issued shares. Thus it would be looking for 23.6 per cent more shares, which amount to 14.2 million shares. RVP has 60 million issued shares.

However, Bid Investment can waiver the condition of the 25 per cent at its own discretion, the notice said.

The other conditions is that there should be no material adverse change in the trading prospects or financial situation of RVP, nor should there be an adverse change occurring in the Kenyan or international financial markets resulting from an outbreak or escalation of hostilities involving Kenya.

Centum has indicated that it is still considering its options and would make a decision as to whether it should review its offer price.

“We shall wait and see and make a decision at the appropriate time,” said James Mworia, the CEO of Centum Investment which has offered Sh50 for the same shares, in an earlier interview. Both Bid Investment and Centum Investment are not expressly seeking a delisting of the company from the stock exchange.

However, Bid said that it would consider a full takeover bid if it achieved the minimum levels required of 90 per cent of the shares of the company.

Centum also would take over the entire company if it managed to get all the needed shares. In showing that it had the necessary resources to take over RVP, Centum said its Sh5 billion liquid assets are in quoted shares, corporate bonds, cash and cash equivalents.

Centum said that its profit, assuming that it had fully taken over RVP, would rise considerably. Centum’s earnings per share (EPS) would rise by 15.1 per cent to Sh4.34 from Sh3.77 reported for the year that ended in March.