KENYA – Leading paint and coating manufacturer Crown Paints, has raised Ksh.642.7 million (US$5.95 million) from its just-concluded rights issue/additional shares issuance.
Proceeds from the rights issue represent the acceptance of the issuance of 64.3 million more shares by the company.
Shareholders nevertheless registered an over-subscription of bids for the rights issue under which they sought 81 million more shares for a combined Ksh.809.6 million (US$7.5 million).
The new shares are expected to be processed on a day before their eventual listing and trading on the Nairobi Securities Exchange (NSE).
The Board of Crown Paints accepted a lower sum than the Ksh.711.8 million (US$6.58 million) sought and representative of 71.8 million shares for Ksh.10 (US$0.093) apiece.
Proceeds from the rights issue are expected to be deployed in firming up the company’s capital base which has been significantly dented by the ongoing COVID-19 pandemic.
In May 2021, the Capital Markets Authority (CMA) approved Crown Paints proposed Ksh.711.8 million (US$6.58 million) rights issue which will see the NSE listed firm distribute an additional 71.2 million shares.
The nod by the capital markets regulator follows the application’s compliance to Capital Markets Take Over and Mergers Regulations in relation to the intention of the company’s major shareholders who have taken up the full rights entitlements.
The rights were to be issued on the basis of one new ordinary share for every one existing share at a cost of Ksh.10 (US$0.093) per share.
Proceeds from the execution of the rights issue are expected to be deployed in firming up the company’s capital base which has been significantly dented by the ongoing COVID-19 pandemic.
Further, Crown Paints intends to use part of the proceeds to facilitate the development of new products, retiring of current debt facilities and funding regional expansion.
“Proceeds from the rights issue are expected to be deployed in firming up the company’s capital base which has been significantly dented by the ongoing COVID-19 pandemic”
The Kenyan operation has been supporting these subsidiaries.
During the year ended December 31, 2019, a provision of US$6 million was made, being impairment in subsidiaries, the company said in the report.
The move saw the value of its investment in the subsidiaries drop to US$10 million in the review period from US$17 million a year earlier.
The value of Crown Paints Rwanda increased and there was no impairment in the subsidiary.