Kenyan company East African Cables Plc (EAC Plc) has reached an agreement to sell a majority stake of Ksh16.2 million shares of its subsidiary based in Tanzania.
EAC Plc announced the sale in a March 6, 2024, statement noting that it had sold majority stake of its East African Cables (Tanzania) Limited (EAC Tanzania) subsidiary to Msufini (T) Limited.
“The completion of the transaction is subject to, inter alia, the approval of the Capital Markets Authority of Kenya, and the validation of other relevant financial and regulatory authorities, as well as approval by shareholders,” read part of the statement.
This move will see EAC Plc relinquish its Ksh16,218,000 ordinary shares with a nominal value of Tsh10 to the Tanzanian based company.
According to the company, the strategic transaction will substantially cut down its debt by extinguishing the subsidiary’s debt.
In turn, the company noted the transaction will align with EAC Plc’s five-year growth strategy, which seeks organic revenue growth and sustainable debt.
The company’s CEO, Paul Muigai also noted that the move is a key factor in delivering the company’s strategic turnaround plan.
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“This strategic move is a key plank in delivering EAC strategic turnaround plan by unlocking value to strengthen our cash flow and restructuring our balance sheet for sustained growth,” he said.
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The group says its main focus now is on Kenya as a manufacturing hub as it continues to sustain a positive growth trajectory, driven by increasing demand from retail and wholesale categories for building and construction projects in the region.
According to EAC Plc, its Kenyan company recorded a 24.4% growth in Gross Profit in half year 2023.
The company further revealed that this could be attributed to increased sales volumes in the retail sector, sustained market development and concerted marketing efforts as well as increased operating efficiency.
“The Earnings Before Income Tax Depreciation and Amortization (EBITDA) over the same period, also significantly improved (114%), while the net earnings grew 15% compared to the same period in the previous year,” said EAC Plc.
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On its part following the purchase of shares, Msufini Director Judith Lambert said that EAC Tanzania is well suited for its portfolio and fits into its growth plans.
East African Cables is a leading manufacturer of electrical cables and conductors in East and Central Africa.
The company was incorporated in 1966 and is listed on the Nairobi Securities Exchange (NSE) with its head office in Nairobi’s Industrial Area.
It comprises of two manufacturing facilities in Nairobi, Kenya and one facility in Dar es Salaam, Tanzania.
The company manufactures Copper Cables and Conductors for domestic application as well as industrial power applications and Aluminium Conductors and Cables used for power transmission and distribution.
Msufini on the other hand is a private limited liability company incorporated in mainland Tanzania, whose primary business is the manufacture and sale of chlorine and sodium hydroxide.
