CMC in asset sales ahead of buyout by Dubai firm

CMC Holdings is seeking to raise Sh312 million from the sale of four properties in Kenya and Uganda to settle part of the auto dealer’s bank loans ahead of its buyout.

Documents seen by Business Daily show that CMC has agreed with Dubai-based Al-Futtaim to sell two properties in Nairobi worth Sh158 million and another two in Kampala valued at Sh154.8 million.

The buyout will see CMC investors unlock the value of their shares that have remained suspended since September 2011.

Shareholders controlling at least 75 per cent will have to accept Al-Futtaim’s offer for the deal to proceed, with the major shareholders supporting the buyout.

The company announced on September 9 plans to acquire the auto dealer, which CMC had short term debts of Sh3.1 billion in March and long-term loans of Sh268.5 million that it intends to reduce by the asset sales.

Credit facilities

“That the proceeds of the sale of such properties are paid directly to the company’s bankers to reduce its debt to its bankers under its existing credit facilities,” reads part of an agreement signed by CMC and Al-Futtaim.

The pact dubbed Standstill Agreement indicates the actions the two parties have undertaken to do and avoid in the period between the announcement and the closure of the deal.

This is aimed at avoiding moves that may negatively affect CMC’s value as Al-Futtaim prepares to publish a detailed takeover offer.

Besides reducing its debts, CMC is also investing heavily in its operations ahead of the acquisition.

The firm has set aside Sh255.5 million for investment in its dealership network in Kenya, Uganda, and Tanzania.

CMC is set to build a quick service bay in Uganda at a cost of Sh13.6 million and construct a facility for its agricultural equipment business in Tanzania for Sh96.8 million.