Eveready gets nod to sell land at explosive EGM
Eveready East Africa board of directors has been given the greenlight to sell the company’s land in Nakuru, the strongest sign yet that the company is completely divesting from manufacturing.
Meeting today at an extraordinary meeting in Nakuru, the shareholders approved a special resolution to sell the 18.5-acre piece of land on which its closed factory sits including all equipment and other assets on it.
Before the approval, there was heated debate among shareholders on whether or not to sell the land, which had initially been earmarked for a real estate development. Managing Director Jackson Mutua said funds raised from the sale of the properties, valued at Ksh 1.29 billion, would be used to wean Eveready off debt, build the company’s headquarters, provided working capital for its distribution business and pay shareholders dividends. The piece of land has been valued at Ksh 837 million, which translates to about Ksh 40 million per acre.
According to the published accounts of 2015, the company, indebted to the tune of Ksh509 million, spent KSh104.1 million on finance costs due to its borrowing levels. The loan includes a foreign denominated currency component that contributed significantly to the loss recorded in the year even though the company was profitable at operations. He said about Ksh310 million would be used to offset the loan as the balance of the credit is held in stocks.
He said the company plans to acquire more than one acre of land on Mombasa Road in Nairobi to build its head offices and distribution centre. “This will complement our retail model and eliminate our property leasing costs,” Mr Mutua told shareholders.
The Nakuru Property, which accounts for 46% of the company’s assets, has been largely idle since the company closed its manufacturing facility in 2014. “A feasibility study conducted on the property failed to give an unequivocal go-ahead for the development of a mixed used complex.
Mr Mutua said new cash would increase the company’s liquidity needed to turn it around by diversifying into new products for its distribution business. Under its 2013-17 strategic plan, the company has introduced five different products as part of its diversification, including Turbo car batteries, Piano writing instruments, Eveready branded bulbs, detergents and bleach brand Clorox.
He said new products were contributing 15% of its revenues and would reduce Eveready’s over-reliance on Energizer, which provides the Energizer batteries that it distributes, as well as Eveready batteries that are distributed under licence.