A Kobil station along Koinange Street. KenolKobil plans to sell some of its assets as it seeks to raise cash to retire expensive debts, improve its cash flow and bounce back to profitability. Photo/Phoebe Okall
What you need to know:
KenolKobil says it will sell off part of its fixed assets as it seeks to raise cash to retire expensive debts, improve its cash flow and bounce back to profitability this year.
The oil marketer is also planning to cut down on its borrowings which stood at Sh439 million as at the end of last year.
The firm also plans to engage lenders with a view of renegotiating the terms of servicing some of its loans.
KenolKobil plans to sell some of its assets as it embarks on a turnaround plan after suffering a net loss Sh6.2 billion last year.
The country’s largest oil marketer says it will sell off part of its fixed assets as it seeks to raise cash to retire expensive debts, improve its cash flow and bounce back to profitability this year.
“In an effort to specifically reduce the current debt burden, the company continues on a fixed assets review which will include the sale of non- and under-performing assets across the group,” said Jacob Segman, the company’s chairman and group managing director.
In the year ended December 2012, the company had fixed assets valued at Sh8.1 billion — most of which are equipment and land — while the total interest on loans stood at Sh2.3 billion.
Kenya’s largest oil company by revenues said it will also cut down on its borrowings which stood at Sh439 million as at the end of last year.
The firm also plans to engage lenders with a view of renegotiating the terms of servicing some of its loans.
“The programme (also) includes a complete business process review with significant reductions in operating costs, more conservative management of foreign exchange exposure, inventories and receivables,” noted Mr Segman.
The management of foreign exchange exposure, better known as foreign currency hedging, has been one of the key challenges for the oil company.
Last year, the firm said it suffered a foreign currency loss of Sh4.6 billion mainly due to hedging, a factor that partly helped widen its losses.
The oil marketer was recently the subject of a failed takeover bid by Puma, a Swiss-based oil company. Observers say the deal could have crashed due to differences over pricing.
