Treasury, Helios talks over 10pc extra Telkom stake on Tuesday

The Treasury and Helios Investment Partners, a private equity fund, are set to meet this morning to discuss the government’s proposal to acquire an additional 10 per cent stake in Telkom Kenya, which if finalised will pave the way for signing of a deal for the sale of France Telecoms’ shares in the company.  

The agenda of the meeting also includes discussing rebalancing of Telkom Kenya’s books, agreeing on how the firm will settle amounts it owes its creditors and signing a clause guaranteeing that the Treasury’s shares at Telkom Kenya will not be diluted.

Also proposed is a resolution that Telkom Kenya’s management must brief the two shareholders on the business performance every quarter, a departure from the current case where the management only gives updates during board meetings.

Tuesday’s meeting follows another held last Thursday meant to iron out areas not agreed upon last week.

An official close to the ongoing negotiations said restructuring of Telkom Kenya’s books will give the firm ability to borrow loans from the market, reducing the need for the two partners to inject cash into the telco.

Among the notable creditors is Safaricom that is claiming Sh639 million from Telkom Kenya.  The leading mobile network operator has gone to court to seeking an injunction to stop the sale of 70 per cent France Telecoms’ stake in Telkom Kenya, before it is paid the amount. 

READ: Treasury stake in Telkom Kenya to rise by 10 per cent

The Communications Authority of Kenya (CA) has also made a claim of Sh1.5 billion being payment of frequency and operations fees.

The State is not paying any money for the additional stake but is being paid in kind for not exercising its pre-emptive rights as contained in the shareholders agreement.

That clause gives the Treasury the first priority to buy France Telecom’s 70 per cent stake in the event the French firm decides to sell, as it now plans to do.

This means that when the deal is concluded, the government’s total shareholding in the troubled company will rise to 40 per cent. Until 2012, the government had a 49 per cent stake in Telkom Kenya while France Telecom held the remaining 51 per cent.

But the State ceded a nine per cent stake in December 2012 following a Sh30 billion debt write-off before losing another 10 per cent in June last year after it failed to inject Sh2.4 billion in a Sh10 billion rights issue.