Copil has secured a 91.99 percent shareholder acceptance to take over full ownership of EAPI.
Photo credit: File Photo
Minority shareholders of de-listed manufacturer East African Packaging Industries (EAPI) are set to receive a buyout offer early next year, in a transaction that will see the Canadian-based parent company acquire total control of the firm.
Managing director Cor Roest, said the Canadian Overseas Packaging Industries (COPIL) is putting together a second offer to minority shareholders, eight years after EAPI de-listed from the Nairobi Stock Exchange (NSE).
“In 2003, COPIL made an offer for the shares they did not already own and 2.3 per cent either did not respond or declined,” said Mr Roest.
Packaging materials
“Now the intention is to make a revised offer next year,” he said, but declined to disclose details of the new offer.
EAPI makes packaging materials for manufacturers such as cement makers and horticultural producers, including flower growers.
The firm delisted in 2003 after COPIL served notice to take over all shares held by other shareholders in a deal advised by Kaplan and Stratton Advocates.
Early this month, the company put up advertisements seeking contact with 132 shareholders, who hold 98,182 shares.
The company had 242 minority shareholders at the time of delisting.
Mr Roest said COPIL put funds for buyout shareholders who will not respond to the offer in an escrow according to the Capital Markets Authority rules.
COPIL, the parent company has interests in the UK and also owns Caribbean Packaging Industries in Trinidad and Tabago, Jamaica Packaging Industries and Paper Processors Limited in Jamaica and Barbados Packaging Industries a distribution operation in Barbados.
The Canadian firm made an offer, which saw it acquire a 92.1 per cent stake up from 75 per cent it had held.
In March the same year, the NSE reviewed the NSE-20 Share Index and replaced EAPI, whose last trading price was Sh8.90, with NIC Bank.
According to the last annual report published for the period ended June 2002, the company had 7,680,000 ordinary shares in issue.
“Since the public shareholding dropped below the necessary 20 per cent minimum required, the Authority approved the voluntary delisting of EAPI from NSE” said the CMA in a statement in its 2003 annual report.
Details of the buyout including the price of the offer are still scanty and Mr Roest said that as a company that is not listed they could not disclose information, including how it has been performing.
He said that the parent company chose to delist because competitors had access to the company’s financial statements and other required disclosures, putting EAPI at a disadvantage because it did not have access to the competitors’ information.
Mr Roest said that there were no immediate plans to relist but that it remained an option in the future.
“COPIL decided that their interests would be best served by delisting. The costs outweighed the benefits. One of the reasons why the ultimate shareholder delisted was that we had a number of competitors happily having access to all our data and we did not have access to theirs” he said.
Analyst said the fair price of the stock should be based on how the company had performed since 2002.
Bob Karina, chief executive Faida Investment Bank, said that it would be very difficult to estimate a fair price without company information including the balance sheet and income statement for the past five years so as to be able to assess how the company has performed over time.
Concealed information
“Competitors having access to information is a valid concern, but once you go public you have to expect exposure to the public. Companies disclose a lot of information. Look at the banks and the amount of information they disclose. This should be a strength and not a weakness” he said.
“That is one of the pitfalls of listing and you are obligated to provide the required information, which means that you may be open to competitors seeing your data” said Francis Mwangi, an analyst at African Alliance.
According to the 2002 annual report, the company had 310 employees and Sh954 million in assets.
The company had made a Sh2.24 million loss after tax and had seen its cost of sales increase by 23 per cent and its selling and distribution expenses go up by 46 per cent.
It had also recorded a Sh18.3 million provision for bad debts.
