TransCentury faces off with Citadel in battle for RVR

Warring shareholders in the troubled Rift Valley Railways (RVR) will face off this morning at an arbitration meeting in London amid hardening of positions that threatens the quick turnaround of the firm.

The meeting is convened by the International Finance Corporation (IFC), which is trying to broker a truce between two investment firms—TransCentury and Egyptian private equity firm, Cidatel Capital.

The twin Private Equity firms have in the past four months been battling for a position of anchor shareholder in the rail firm after the Egyptian firm acquired a 17.5 per cent stake in November when it bought 49 per cent of Sheltam, the operator’s lead investor.

RVR won a 25-year concession to run the 1,200 kilometre Kenya-Uganda Railway in 2006.

The Citadel buyout was opposed by TransCentury which has a 20 per cent stake in the firm and has threatened to block it in courts—prompting IFC to step in the tussle amid claims that Uganda and Kenya had taken sides on the issue.

It has also emerged that the Egyptian firm has completed negotiations and paid for the entire 35 per cent stake held by Sheltam for $9.7 million (about Sh720 million) and that the money is in an escrow account.

The revelation is said to have infuriated TransCentury which is insisting that Cidatel is in the rail firm illegally and could not assume the role of investor.

Sources close to TransCentury says the firm will go for an arrangement where all the shareholders will be transferred to a special purpose vehicle with equal rights, an arrangement that Cidatel has ruled out, saying it only invests in companies in which it has a controlling stake.

High stakes

The spat between the two PEs is threatening the turnaround of RVR, which since been granted the concession three years ago has failed to live up to the expectation of Kenya and Uganda governments.

It remains to be seen what will come out of the high stakes London meeting where both the Ugandan and Kenya governments have sent representatives.

Kenya is represented by Investment Secretary Esther Koimett and transport permanent secretary Cyrus Njiru.

Cidatel interests will be taken care of by its managing director, Mr Karim Sadek, and a top executive, Mr Al Barbary, while TransCentury will have its managing director, Dr Gachao Kiuna, and director Mr Ngugi Kiuna at the talks.

“The deal is done and sealed and all Citadel Capital is waiting for now is IFC’s consent,” said Mr Sadek, in an email to Business Daily.