[2007-09-19]  Olympia Confident of Achieving $5.9 Million Target in Rights Issue
The rights issue is of 30 million shares at the rate of three new ordinary shares at the rate of Ksh5 for every one ordinary share

Going by the reaction of the market, Olympia Capital Holdings is all set to realise its plans of raising Ksh400 million ($5.9 million) for its expansion programme through its recently floated rights issue.


The shareholders are not only liquid, but have confidence in the company, according to managing director of Tsavo Securities Fred Mueni.

He further said that even if all shareholders don't take up their rights, the chances of the company meeting its objective are still very high. "The rights issue comes at a perfect time when refunds for the Kenya Reinsurance Corporation (Kenya Re) initial public offer are being paid out."

The shares are issued at a discounted price of Ksh14 (US cents 2) and will close on September 14, while trading in the new shares at the bourse commences on October 22.

The rights issue is of 30 million ordinary shares at the rate of three new ordinary shares of Ksh5 for every one ordinary share.

Investors who applied for Kenya Re shares started receiving their refund cheques last week. This is quick compared with other recent IPOs which comes as consolation to investors who will get only a fraction of the shares applied for, following a 400 per cent oversubscription. Overall, 1.2 billion shares were applied for against the total of 240 million that were being offered.

According to Olympia chief executive Michael Matu, the company intends to use the money to upgrade its pipes and ceramics manufacturing plant in Kenya and fund its expansion plans. He said that the company has already identified two companies it intends to buy out in the next 10 months. "We also intend to use the money to raise our shareholding in the Botswana subsidiary," said Mr Matu.

Two weeks ago, the Botswana Stock Exchange approved the migration of Olympia Capital Corporation (Botswana) from its venture capital board to the main board. This effectively implied that the company, which is 27 per cent owned by Olympia Capital Holdings Kenya, ceased to be classified as a "speculative" investment on the Botswana bourse.

The BSE requires that share certificates and all other official documentation released by companies listed on the venture capital board except the annual report are marked as "speculative." This requirement, according to Mr Matu limits such firms' efforts to raise capital from institutional investors.

The BSE listing regulations require that a company has to sell at least 20 per cent of its issued shares to the public before it can migrate to the main board, up from the minimum five per cent required to list on the venture capital board. They also require that such a company have at least 300 shareholders and demonstrate a profitable track record in the preceding three years.

Mr Matu said that Olympia Kenya hopes to raise its stake in the subsidiary from the current 27 per cent to over 50 per cent by February next year.

The parent company's share holding was diluted from 53 per cent to 27 per cent in March after it failed to participate in the Botswana subsidiary's rights issue. Mr Matu hopes to use the Ksh420 million ($6 million) expected to be raised from the parent Kenyan company's rights issue, which commenced on September 3, to buy more shares in the company.

Formerly known as Dunlop Kenya, Olympia has 10 million ordinary shares listed on the Nairobi Stock Exchange (NSE) and the rights issue is set to increase its issued shares fourfold to 40 million.

The company holds substantial interests in its tile manufacturing subsidiary in Botswana, which it acquired in 2001, and a 74 per cent stake in Plush Properties Ltd, a South African company that it acquired for Ksh190 million ($2.71 million) last year.

The group realised a consolidated turnover of Ksh396.7 million ($5.66 million) last year and a profit before tax of Ksh26 million ($371,428) after factoring in the acquisition expenses.

Olympia Capital Holdings Ltd is engaged in the manufacture and sale of floor tiles and adhesives.



Source: Copyright © 2007 East African.