Regulator approves Aureos, TransCentury share swap

TransCentury Chief executive Gachao Kiuna.
TransCentury Chief executive Gachao Kiuna. Photo/FILE 

Market regulators have approved a cashless restructuring deal that gives TransCentury full control of investment vehicle Cable Holdings, the main shareholder in East African Cables.

In a statement released Monday, TransCentury’s board announced the completion of the share swap with private equity fund Aureos East Africa after getting clearance from regulators.

“The requisite statutory and regulatory approvals needed have been obtained,” the board said. “The Capital Markets Authority has granted an exemption in respect of the indirect acquisition of an additional 4.01 per cent of voting shares in East African Cables under regulation 5(2) (c) of The Capital Markets (Takeover and Mergers) Regulations 2002.”

The regulations say anyone with effective control of a firm who buys more shares is presumed to intend to effect a takeover. They are required by law to comply with a raft of procedures meant to protect other shareholders.

Regulation 5(2) (c) allows CMA to provide exemptions for schemes that restructure the listed company’s share capital, including acquisitions and amalgamations.

TransCentury and Aureos East Africa had a combined interest in EA Cables of 68.38 per cent through Cable Holdings, which they co-owned 94.8 per cent and 5.2 per cent. The infrastructure investor has now acquired the 5.2 per cent stake from the private equity fund in exchange for 6.3 million ordinary shares to be listed in Nairobi Securities Exchange’s alternative investments market segment.

Going by Monday’s trading price at the NSE, Aureos stake was valued at Sh160 million.

TransCentury chairman Zephaniah Mbugua had announced the impending deal at the company’s Annual General Meeting in May. The move is intended “to provide Aureos with an opportunity to participate in TransCentury’s growth” while giving them a more liquid asset.

The share swap was based on the weighted average trading price of the two companies in the 90 days ending February, at a ratio of just under two shares of EA Cables for each unit of TransCentury’s stock. During the 90 days under consideration, TransCentury’s shares traded at a simple average of Sh29.4 compared to EA Cables’ Sh15.5, according to market data.

The deal, which became effective on July 8, saw TransCentury’s issued shares rise to 280.2 million from 273.9 million, a 2.2 per cent dilution for existing investors. Shareholders will, however, benefit from a larger share of EA Cables’ earnings.

NSE has approved the admission of the 6,334,192 shares to the Official List of the Alternative Investments Market Segment.