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Kenya: KCB Rights Issue Gets Go Ahead
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The Nation (Nairobi)
10 May 2008
Posted to the web 12 May 2008
Kaburu Mugambi
Nairobi
Kenya Commercial Bank shareholders on Friday allowed the company to do a Sh5 billion rights issue to raise cash for its expansion.
Making the proposal during the bank's annual general meeting, chairman Susan Mudhune said the company's expansion to Tanzania, Uganda and Southern Sudan has weighed down on its resources.
"Due to the successful expansion of the business into the region, our capital base has begun to experience pressure as business requirements grow," she told shareholders at Moi International Sports Centre, Nairobi. "In order to support this growth and enhance shareholder value, we need to inject additional funds into our capital base."
With the issued rights, existing KCB shareholders have the privilege to buy a specified number of new shares from the firm at a specified price within a specified time. Standard Investment Bank managing director, Mr James Wangunyu, who is overseeing the rights sale, said his team will immediately notify the Capital Market Authority of the approval after which it would reveal how many shares will be up for sale.
The meeting also resolved to increase the company's authorised share capital from Sh2 billion to Sh2.4 billion by creating 400 million new ordinary shares of Sh1 each. Increased capital means the bank can take more deposits and lend even more.
Shareholders also allowed the company to form an employee share ownership scheme (Esop). Consequently, 150 million of the un-issued shares in the company would be set aside for allotment to the employees over a period of four years.
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The reason for setting up this kind of scheme is to motivate the bank's employees to work more as well as maintain them within the company.
KCB also got a go-ahead to seek listing on the Uganda Securities Exchange and Dar es Salaam Stock Exchange.
Voting for directors began after seven shareholders presented themselves for four seats available on the board. The results are due next week.
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