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KenolKobil CEO to reap Sh1.1bn in looming buyout

Kenol Kobil limited group managing director David Ohana. FILE PHOTO | NMG
Kenol Kobil limited group managing director David Ohana. FILE PHOTO | NMG 

KenolKobil chief executive David Ohana is set to reap a windfall of Sh1.12 billion from the sale of his employee share ownership (Esop) stake in the oil marketer that is being sold to French firm Rubis Énergie.

Mr Ohana, who has been at the helm of the NSE-listed KenolKobil since July 2013, owns 88 million shares he acquired through the Esop, and which he has committed to sell to Rubis at a price of Sh23 should the French firm be allowed to execute its bid to take over the Kenyan oil marketer.

He was granted the options on June 20, 2016 at a price of Sh10.30 apiece, the market price at the time. This means that he will be paid Sh2.02 billion for the shares, which he acquired at Sh906.4 million, giving him a 123 per cent investment gain.

“They will acquire (shares) from everybody, including me. It is a good time. We have worked hard to turn around the company,” Mr Ohana said yesterday.

He said the Esop terms remain the same except the vesting period, which is likely to be shortened to fast track Rubis’ full acquisition of KenolKobil.

The Capital Markets Authority (CMA) earlier this week allowed the firm to list 79 million shares into Mr Ohana’s Esop pool at the end of this month, adding to the nine million units that have already been issued to take the total to the full 88 million.

The 79 million additional shares will take KenolKobil’s total issued shares to 1.55 billion.

Suspicious trades

The Capital markets Authority (CMA) last evening said it had launched an investigation into suspicious trades made in the run-up to the takeover announcement.

“The authority has instructed the Central Depository and Settlement Corporation to place a freeze on the suspected accounts to allow for the conduct of the necessary inquiries,” said CMA in a statement.

Rubis chief financial officer Bruno Krief told the Business Daily that the firm remains open to retaining the services of Mr Ohana upon completion of the buyout.

“Mr Ohana is a person of value, who has brought a lot to the company. First we have to meet him, get to know him, share the strategy plan and get his ideas. There is no reason why he should not be getting along with us,” said Mr Krief.

Mr Ohana’s fortunes changed with the announcement that Rubis had bought the entire stake that Wells Petroleum Holdings — a company associated with the late Nicholas Biwott — held in KenolKobil.

“The family (Biwott’s) is the one that sold the block of shares on Tuesday, and it is widely believed that they have additional interest in the firm,” said the source familiar with the transaction, who asked not to be named in order to comment on the issue.

Wells Petroleum sold its entire 24.99 per cent stake or 367,793,124 ordinary shares to Rubis at Sh15.30 per share for a total of Sh5.63 billion.

Rubis, which is listed on France’s Euronext Paris Stock Exchange, has made an offer to buy out shareholders of KenolKobil at Sh23 a share, a deal which values the company at Sh35.7 billion.

This price represents a premium of 50 per cent on the opening price of Sh15.30 in yesterday’s trading. That premium, however, shrank to 16 per cent after the share price rose by 29 per cent to close the day at Sh19.80 on news of the offer lifting KenolKobil market valuation to a new high of Sh29.1 billion.

In addition to the billions of shillings earned in the market trade on Tuesday, Wells Petroleum stands to rake in an extra Sh2.83 billion in case of a successful takeover at Sh23.

This is because Rubis has committed to paying the Biwott firm the difference between the price at which it bought the block shares on Tuesday and the final offer price paid to other shareholders.

“Rubis Énergie agreed that…on successful conclusion of such takeover offer, it will pay to Wells an amount equal to the difference between the offer price per share ultimately paid by Rubis Énergie to other shareholders of KenolKobil pursuant to the offer and the market price paid to Wells for every share that purchased from Wells pursuant to the block trade,” said Rubis in a notice to shareholders.

Rubis was only able to make the takeover offer after acquiring the quarter of the company on Tuesday. This effectively means the French firm needed the cooperation of either Wells or a consortium of other shareholders to reach the threshold required to launch the bid.
Latest filings dated February 201, 2018 show that the top 10 KenolKobil shareholders own 64.4 per cent of the company.

Nine of these are either institutional investors or nominee accounts, whose beneficial owners are unknown given that KenolKobil is one of the most secretive firms on the NSE.

Tanzanian billionaires Aunali and Sajjad Rajabali, with a joint stake of 5.22 per cent, are the only individuals named on the firm’s top shareholders list. The stake could earn them up to Sh1.8 billion if sold.

Petro Holdings Limited, with a 12.9 per cent stake or 190 million shares, stands to net Sh4.4 billion under the takeover terms offered by Rubis.

Rubis expects to complete the takeover early next year, Mr Krief said yesterday. Mr Krief said the deal was awaiting approval from various regulators, including the CMA, the Competition Authority of Kenya and the Energy Regulatory Commission.

Rubis already operates in 12 African countries in the mid and downstream oil markets, but has no presence in Eastern and Central Africa.

Mr Krief said the company will continue to expand KenolKobil’s retail market footprint in Kenya and the region, as well undertake capacity expansion in the LPG and bitumen segments.

In 2017, KenolKobil held a market share of 16.5 per cent in the Kenyan petroleum sales, second only to Vivo Energy's 17.6 per cent.

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