Kenya oil firm to raise Sh1.5b via CP

May 17, 2010
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, NAIROBI, Kenya, May 17 – In a bid to shore up its financial flexibility, KenolKobil has re-introduced its Commercial Paper (CP) programme through which it intends to raise Sh1.5 billion.

Group Finance Director Pat Lai said the re-launch of this facility, which was inactive in 2009, will help free-up other internally generated capital some of which will be used to fund various long term investments such as the on-going regional expansion programme.

“The CP Programme is a very welcome tool as it will release funds for further growth and investment as the company peruses its ambitious ‘Move South Strategy’ as well as other investment plans it has put in place as approved by the Board,” he said in a statement.

A Commercial Paper is an unsecured, short-term loan issued by a corporation for financing working capital and it is usually issued at a discount that reflects the current market interest rates.

The oil marketer’s programme has been in the market since 2002 and it is intended to be used as a revolving short-term financing facility to diversify and supplement its current (working) capital.

The Capital Markets Authority (CMA) approved the programme which takes effect from June 1 this year after undertaking a series of rigorous evaluation.

“The approval of the programme which was made without a demand for a guarantee, was based on the strength of the company’s strong performance and the group management,” Mr Lai added.

The manager said they opted for the notes instead of looking at other instruments such as the Short Term Notes Programme due to its past record where investors were guaranteed good returns.

The Notes have tenures of one year or less from the date of issuance and are offered for sale through placing agent, Kestrel Capital East Africa. The Information Memorandum can be accessed from the company’s website www.kenolkobil.com.

Through its ‘Move South Strategy’ the Group has entered seven African countries and is currently trying to venture into the Zimbabwean market by acquiring the Shell & BP operation there.

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