TPS shareholders scoop up rights

August 12, 2010
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, NAIROBI, Kenya, Aug 12 – Tourism Promotion Services (TPS) Eastern Africa major shareholders on Thursday took up 59 percent of the firm’s rights on offer valued at Sh752 million, a few minutes after its Rights Issue was launched.

Managing Director Mahmud Janmohamed said the Aga Khan Fund for Economic Development (AKFED) – a major shareholder of the firm – PDM Holdings, Industrial Promotion Services (IPS) Kenya and the International Finance Corporation took up their rights in full in the transaction where it is seeking to raise Sh1.18 billion.

“Collectively, AKFED, PDM and IPS represent 50.34 percent of the total number of rights being issued. Furthermore, IFC that hold 9.09 percent of the total number of rights being issued have confirmed their intention to take up their rights valued at Sh107.76 million,” the MD said.

This announcement increased the likelihood for the Rights Issue, which closes on August 31, to be oversubscribed. If this happens, lead transaction advisors pledged to process the refunds on October 1, a few days after the announcement of the issue’s results on September 24.

The owner of Serena Hotels has offered 24.7 million shares to eligible shareholders at the ratio of one new share for every five ordinary shares held at a discounted price of Sh48. On Thursday, the share was trading at Sh55; a price which analysts said showed that the share was still receiving support from the market.

The listing and commencement of the trading of the new shares is slated for October 4. If the firm achieves it target, its market capitalisation at the Nairobi Stock Exchange will go up from the current Sh7billion to about Sh8.4billion

Mr Janmohamed said proceeds from the issue will go towards financing various projects including the acquisition of various lodges as well as expansion and refurbishment of some of its hotels. Nairobi Serena is one of the facilities that will benefit from a facelift, where $25 million (Sh2 billion) will be injected in the next three to four years in a bid to make it the ‘lead product’ in East Africa.

Serena’s portfolio comprises of 23 luxury hotels, resorts, safari lodges and tented camps in Kenya, Uganda, Rwanda, Tanzania, Mozambique and Zanzibar. The hotel also owns and manages proprieties in Afghanistan, Pakistan and Tajikistan.

The MD also hinted at plans to cross list their shares in the regional bourses in coming months. This will be done once the process to integrate TPS Uganda into the listed holdings company is completed.

“Once we have integrated Kampala (Serena Hotel) into TPSEA, we hope to list on the Uganda Securities Exchange, thereafter on the Dar es Salaam Stock Exchange and possibly in the future on the Rwandan stock exchange,” he explained.

The process would involve a share swap rather than an exchange of money, he added, although the finer details of the plan are still under wraps.

Meanwhile, during the launch the company disclosed that it has underwritten 30 percent of the issue with CfC Stanbic Bank and Diamond Trust Bank; making it’s the first transaction in a long time to secure an underwriter.

Amish Gupta an investment banker at Standard Investment Bank that is the transaction’s sponsoring broker explained that this move was prompted by the need to ensure that the issue was successful given that there were three rights issues that are ongoing and others that have just been concluded.

“We felt that there might be a clash in the timetable and it was also necessary to ensure there’s a back up plan for the capital that needs to be raised,” Mr Gupta said.

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