The closure of the Kenyan subsidiaries, Ardan Logistics Kenya Ltd, Ardan (Medical Services) Ltd and Ardan (Civil Engineering) Ltd, will improve the group’s overall cost base.
The liquidation is only in relation to the Company’s Kenyan subsidiaries and not the holding company, which is the listed entity thus the company, will remain listed on the Nairobi Securities Exchange and hopes to maximise value for its Kenyan shareholders through the successful expansion in industrial projects and operations in Ethiopia.
“The downturn in the oil and gas industry, market adjustments and the failure of certain key clients to settle debts, together with increasing creditor pressure has led to the decision to close Kenyan operations and focus all of the company’s administrative functions and activities in Ethiopia for the time being,” the firm stated.
This decision will enable the Company to focus its resources and management on the Company’s newly formed industrial division and its joint venture with Orchid Business Group PLC.
The firm’s Board believes the opportunity in Ethiopia is highly compelling and offers the Company and its supportive shareholders the best opportunity to build value both in the short and long term.
“With our new focus on the widening opportunity in Ethiopia, we have taken steps to place our Kenyan subsidiaries into formal liquidation proceedings. Since the downturn in the oil and gas market, we have found that clients are no longer placing a premium on our high quality services and are demanding terms which are not economically viable. In addition to this, late payment by certain operators and increasing creditor pressure in Kenya necessitate and justify this shift at this time to serve the best interest of the long term development of the business and shareholders,” explained Chief Executive of Atlas, Carl Esprey.
Last month, the firm announced plans to set up a joint venture in Ethiopia in partnership with Orchid Business Group PLC.
Orchid is an Ethiopian company which specialises in infrastructure, construction, manufacturing and logistics and with over 2,000 members of staff.
Atlas Development on the other hand specialises in providing the full spectrum of support services including risk management consulting, civil engineering, provision of remote workforce accommodation, facilities management, turn-key medical support, transportation and storage.
The joint venture, which is on a 50:50 basis, is aimed at providing services to clients primarily in the natural resource development and infrastructure sectors, through civil engineering, project management, work-force accommodation solutions and on-going life support services.
Atlas Development will mainly aid in ensuring provision of international standard services while Orchid will provide local support.
According to management, the Atlas Development is targeting to benefit from the growth potential of Ethiopia in the extractive and infrastructure sectors.
Year to date, the company is down 81.7 percent and was the top loser in the month on October.
The London-listed firm listed its shares on the NSE Growth and Enterprise Market Segment in December 2014.
This marked the first dual listing between the London Stock Exchange and the NSE.
The firm offered 10 percent of its 393.9 million total issued shares for cross-listing on the NSE with price per share set at Sh11.50 with a minimum subscription of Sh1 million per investor.
The firm successfully raised Sh450 million (US$5 million) through a private placement to Kenyan investors after issuing 39 million shares offered solely in Kenya.