, NAIROBI, Kenya, May 13 – East African Breweries Limited (EABL) has announced the value of the sale of one its subsidiaries, Central Glass Industries Limited (CGIL), to South Africa’s Consol Glass Proprietary at Sh4.5 billion.
The sale also includes a Framework Supply Agreement which will ensure continuity of supply of glass bottles to EABL and its group for a term of five years and in which Consol Glass Proprietary has agreed to pay EABL a success fee of Sh420 million.
EABL has also agreed to provide certain management and general assistance services to Central Glass Industries Limited at Sh200 million for an initial period of two months after completion, and a monthly fee of a Sh100 million for additional services to be provided for twelve months following completion.
The proceeds from the sale will be used by EABL to reduce existing debt and in investing in its core beverage business.
The sale is waiting EABL shareholder approval during the Extraordinary General Meeting of the Company on 27th May 2015.
EABL posted 11 percent increase in net profit to Sh4.6 billion in six months to December 2014 from the Sh4.1 billion recorded same period 2013.
The management attributed the growth to double digit growth in spirits, premium beer and Ready-to-Drink and improved performance in Tanzania and the export markets.
“The transaction will also enable the Company to divest of a non-core asset enabling increased focus on core business activities with a view to increasing its profits and returning value to shareholders, “noted Standard Investment Bank Research.
CGIL made a profit of Sh134.8 million in 2014, down 60.8 percent from the previous year with higher costs and lower revenues leading to a lower operating profit.
Consol Glass Proprietary currently exports its products to 17 markets in Africa, including Kenya.