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Kenya: No Good News for BOC Shareholders
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Business Daily (Nairobi)
28 April 2008
Posted to the web 28 April 2008
Emmanuel Were
Shareholders of BOC Kenya went to their annual general meeting last week hoping for word that they would start trading in their shares soon.
Instead they received another shock that there is no solution in sight to the bungled merger with Carbacid investments that saw trading in the two counters suspended by the Nairobi Stock Exchange two years ago.
The suspension has seen shareholders miss on capital gains that the market has realised since then as the NSE 20 share index grew by 30 per cent to close at 5,207 points last week.
At the AGM, the board of directors told shareholders that there was no solution in sight despite recent reports of efforts to have the dispute over the merger settled out of court.
"The feeling of shareholders has been expressed clearly in court," said Joseph Kibe, chairman of the board of directors. He said they would keep the shareholders appraised of developments.
Capital Markets Authority (CMA), the regulator, went to the high court two years ago to seek redress after its own organ, the Capital Markets Tribunal, allowed BOC Kenya to go ahead and acquire Carbacid.
Entry into the lucrative carbon dioxide market pushed BOC Kenya to make a takeover bid for Carbacid.
The attempt hit the wall with only 71 per cent of the shareholders of Carbacid giving the green light for the merger when an acceptance level of 80 per cent was required for the takeover.
BOC Kenya waived the condition and informed the regulator on April 27, 2006, a move that compelled CMA to veto the takeover deal.
CMA argued that it should have been informed of the changes two days earlier, April 25, 2006, when the offer was supposed to have expired.
"The fear is that we shall be told the same thing next year," a shareholder said in response to the assurance of the board of directors. Some of the proposals put forth by the shareholders for returning the security to the market included a withdrawal of the takeover bid, which has also been supported by Carbacid directors in the recent past.
Other avenues that shareholders proposed were an issuance of bonus shares to compensate for the loss in capital gains that they would have received during the time period when the shares have remained dormant following the suspension.
A withdrawal is, however, constrained by considerations over which of the contesting parties would bear the costs as well as the dispute in court between CMA and its tribunal.
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"Nothing has come from the CMA, probably they have been busy with the ongoing Safaricom initial public offering," said a source who has been actively involved in an initiative for an out of court settlement between all the parties.
"As things stand we still see that the case will proceed."
It was disclosed at the meeting that in the two years that the case has been pending, BOC has incurred costs, "relating directly to the intended acquisition", amounting to Sh22.5.
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