Nairobi — Shareholders of Total Kenya are set to approve the acquisition of Total Marketing Kenya Ltd, the subsidiary created by its parent company, to acquire Chevron operations in Kenya and Uganda.

In advertisements in a section of the media on Thursday, the extraordinary annual general meeting will be held at a Nairobi hotel on Monday next week.

This follows a successful agreement by its parent company, Total Outer Mer S.A, to sell it the business arm.

According to a circular sent to shareholders last month, the approval will be necessary for the firm to acquire 100 per cent legal and beneficial share capital of the subsidiary.

"As soon as practicable after the acquisition, the entire assets and business of TMKL will be transferred to Total Kenya Limited," reads a section of the document.

In an earlier notice to shareholders, the board of directors had indicated that they would pay an estimated Sh3.9 billion to its parent company.

The transaction was to be financed through the creation of 1223.5 million redeemable preference shares (RPS).

However, in a detailed explanation to shareholders, the directors note that the acquisition will be financed in three ways.

Apart from the shares, there will be an external commercial medium-term loan of up to Sh4.6 billion and existing short-term loan facilities of Sh2.7 billion from existing lenders.

"The issue of the RPS will enable TKL raise finance for the acquisition in a quick and efficient manner and at a cost more favourable to it," says the circular dated September 17, 2009.

Reimburse

Similarly, the listed oil marketer will also reimburse Total Outer Mer SA Sh1.1 billion as consideration and Sh121.5 million as stamp duty.

The payment will be made in cash upon consent by shareholders.

"The board believes the acquisition is in the best long-term interests of TKL and its shareholders, and is a measure of commitment to increasing the value of the company," adds the circular signed by Mr Herve Allibert chairman of TKL.

Total Marketing Kenya operates the 165 Caltex-branded service stations, one terminal, seven fuel depots, six aviation facilities and one lubricants blending plant.