Monthly Archives: June 2007

Uchumi shareholder bond

Uchumi Supermarkets (in receivership) has now formally asked shareholders to subscribe to a bond to raise Kshs 650 million ($9.85 million). These bondholders will rank alongside the government who lent Kshs. 675 million to Uchumi last year, but subordinate to (paid after) to bank ‘s debt

The bond offers 10% per annum, (which is more than any bank savings account in the country) and is allocated at a rate of 5 shillings for each share held (minimum subscription is 5,000 shillings, in 1,000 increments thereafter) D/L is 31/7

While the solicitation for the bond mentions the company’s’ very successful and impressive turnaround in receivership, there are no numbers to back this up.

I remain a faithful shopper (for groceries & other household items) at Uchumi, but as a shareholder, it is prudent to ask some questions before considering reinvesting:

– What is the performance of the company in receivership? Is it profitable on a monthly basis? Is it generating or consuming cash? Putting together a bond prospectus is expensive and a receiver manager is under no obligation to disclose financial performance to shareholders – but Uchumi was is a public company and disclosing such information to potential investors and the public should not coats more than 100,000 by way of a newspaper advertisement
– What is the level of bank debt and has it gone down? How much is still owed to the banks i.e. KCB and PTA? This is the 4th or 5th time the company is raising money in 3 years (after the 1.2 billion rights issue, 300 million suppliers assistance, 657 million from the government, 300 million attempted from shareholders
– If company is doing so well (media have reported 50% improvement over Uchumi’s best ever recent year), what was so wrong that the company collapsed? I have written before on how receiver managers can sometimes be better managers than the owners of a company and would like to see if this is a textbook example.

Kutwa Tuesday (June 12)

IPO Wanted

To plug a hole in the budget
Kenya Pipeline is in the news again – this time suing the Kenya Times group. The company has an enviable profitable track record for a Parastatal which makes it a ripe prime candidate for an IPO but mostly gets saddled with bad news for all the wrong reasons and controversial. A dose of public shareholding will lead to greater transparency & accountability and less political football at the company which is more profitable than Kengen (It earned 3.9 billion (pre-tax) in June 2006, up from 2.4 billion in June 2005 (Kengen reported 3.8 and 1.8 billion pre-tax in those years)

Kenya Re earnings
A point brought out by MainaT’s comment – what was Kenya Re’s true profit in 2005?

Post TED: Kenyan wildlife
The Economist analyses hippos and cheetahs

opportunities

Jobs

  • Director of internal audit at East African Development Bank. Apply through KPMG at esd@kpmg.co.ug by 20/6
  • Investment Climate Facility for Africa: Finance Director, Director, Strategic Knowledge, Projects Director, Director, and Legal/Regulatory Affairs. Apply through PWC at recruit@tz.pwc.com by 15/6
  • Project manager at Inmobia. Apply to job@inmobia.com by 12/6
  • Research assistants at Kemri-Wellcome. Apply online
  • Management trainees at Kenya Wildlife Services. D/L is 22/6
  • Chief internal auditor at Kenya Women’s Finance Trust. (D/L is 18/6)
  • Nielsen: IT system manager, research executives. Apply to hr@acnielsen.co.ke by 16/6
  • Safaricom: senior manager financial systems & analysis, site acquisition officer, senior learning & development officer, senior buyers (communication, technology – 3 positions). Apply to hr@safaricom.co.ke by 15/6
  • Group head of ICT at UAP insurance (D/L is 21/6)
  • Urgent Cargo: credit controller, sales executives, HR & admin officer. Jobs@urgentcargo.com by 22/6
  • Wilderness Lodges (owners of Keekorok) head of marketing, internal auditor. Apply to recruit@adeptsystems.co.ke by 22/6

Awards

  • Africa women entrepreneurs (from Ethiopia, Kenya, Rwanda, Tanzania Uganda) get voices heard and be recognized. Nominations to be submitted to the Cineartsafrika website by 29/6
  • East African Community students essay competition. D/L is 19/7

Partnerships

  • Become a Citi hoppa franchisee. Cost at 50,000 per bus and get details at info@citihoppa.com
  • Become a Keringet water distributor. Details at keringet@water.co.ke
  • Get a mobile phone kiosk Sasanet. Details at sales@sasanet.co.ke

Vote The Electoral Commission of Kenya has reopened voter registration from June 11 to July 10 for Kenyans wishing to vote in the elections expected in December 2007.

Previous Kutwa Tuesday

TPSEA (Serena) 2007 AGM

TPSEA aka Serena Hotels held their first ever (public) AGM, as the company was listed after the last AGM was held.

The company with with 15 properties (11 owned, 4 managed) is enjoying the ongoing tourist boom. (Sarova should hurry up and take advantage with an IPO while the sector is doing well). 64% of income is earned in Kenya, with improved returns from Tanzania and other properties recorded. But, though Kenya recorded an increase in tourists visiting, a significant number were conference tourists – whose and gains are only felt by Nairobi (not coast or safari) hotels

In a keynote speech, the MD mentioned that they have maintained profitability despite the appreciating shilling, noting that a weakening or the SA rand had provided significant benefits to the south African tourism sector.

He also mentioned that the expansion into the region would cushion the company from company specific risk. Through managing properties (they don’t own) in Rwanda and Uganda, they were able to increase awareness of the Serena brand at lower cost – and once those hotels are established and profitable then the group may bid for equity in them.

Future growth plans include Lake Nakuru, Laikipia, and southern Tanzania. The company has also invested in an energy efficiency program that will be completed this year.

The MD called on government to improve on infrastructure (roads) and security while he at the same time lamented that the environmental authorities (NEMA) had approved some lodge expansions that could harm environment and ecosystem.

Shareholders asked:
why company has high retained earnings & low dividend and, increased property investment costs: MD response was that tourism is a high risk business and it is important to keep reinvesting in hotels to maintain premier status and visitor preference. He noted that Kenya used to have four major hotel chains – and that block hotel and AT&H went out of business because they did not make such crucial investments to keep up. Serena must continually refurbish facilities, and must have ready cash since a lot of opportunities come up at short notice. Still, they were able to contain other costs (only 1% increase from the year before)
Serena a market leader? hotels in Nairobi do share information and this confirms Serena’s leadership in terms of (revenue per available room), while coast and safari circuit hotel statistics are not easily available – but going by the packages that tour operators put together confirm that Serena properties are marketed as premier packages
corporate social responsibility can shareholders recommend CSR projects to the company? Management said yes as long as projects are in areas where the company has properties. Shareholders can also get discount rates if they book through the Serena offices.

goodies: bonus share, dividend, and a lunch box (with roast beef slice, bottled water, apple & banana, yogurt, boiled egg, cake). I noticed some other shareholders boxes had juice & hamburger as opposed to my water & roast) and I gave my offered my boiled egg (can’t eat that) to a lady seated neat to me, who surprised me by giving me her yogurt – fair trade?

See: another past Serena AGM report.

Saudi Ok, Africa Not

After listening to a week of stories on aid, development, and entrepreneurship, we emerged from Ted Global in Arusha to find one of the proponents of a new vision for development in Africa – outgoing British prime minister Tony Blair endorsing shady dealings that involve Saudi Arabia in the name of strategic relationships

The implications of this are that (accoring to the US & UK governments) is that corruption/economic transgressions in Saudi Arabia are ok, but not in Zimbabwe or (former aid darling) Uganda. But the effects of these are that no British high commissioner can come preach good good governance to Kenya, or any other African country.

Africans are not all corrupt, not are we without faults, but so are British and American and their agents. In the words of George Ayittey we will find African solutions to African problems and be wary of cheerleaders on governance.

NN (Part II)

In Part I I was unable to get enough local newspaper content. But when I got back to my room at the end of Day 3 (Wednesday, around 7 pm), I found a “dear me” letter from the hotel reception and attached to it were three English newspapers – just as I had requested, and even though it was the end of the day, that was great! But unfortunately they were from the day before (Tuesday). Still you work and I was later able to get several Swahili newspapers on Thursday.

So here goes: highlighting local financial & development issues and challenges specifically addressed to during the TED week

– There is a shortage of a new anti-malaria medicine – ALu (syrup), made by Norvatis to be given to infants. And the government will come up with a national HIV testing program. combating malaria and HIV were cited as major steps needed to be achieved to enable Africa to develop
– Celtel has lowered its Internet access charges from Tshs. 1766 to 475 (about $0.4) per MB downloaded. The company has also extended its East Africa network to Congo, Gabon and the giant DRC
– The Tanzania Chamber of commerce, industry and agriculture won an afriglobal African achiever award in South Africa.
– Tanzania exported 51,000 tons of coffee last year, earning the country earning about $100 million
– Education will get the highest allotment (17.1%) of the country’s 5.1 trillion ($4.2 billion) budget to be announced this month.
– In preparing for the budget, the government has commissioned a report to crack down on vehicle misuse – it is estimated that the government owns over 800 land cruiser VX’s that costs over 33 billion a year ($26 million) to run
– Ben Enterprises launches – kazitanzania.com – a database of quality jobs.
UNICEF donates 1,500 lap desks to Salei primary school in Arusha
– The government denies knowledge of Integrated Property Investments – a British firm that is reported to have acquired 120 acres of Indian Ocean shoreline in the Dar es Salaam area to set up a $20m mangrove plant.
– The University of Dar es Salaam has an evening MBA program
– The Tanzania government plans to start auditing all foreign mining companies to verify their processing and export figures
– Last year, the Tanzania post office system processed 17.7 million letters which was 8% less than the year before. Also reducing (by 5%) were the number of parcels leaving country and the number of registered letters (down 19%). All these were attributed to advances in technology (email, SMS, fax).
– Tanzania wants most of the 500,000 refugees from Burundi to return to their country by year end
– Zara solar limited (of Northern Tanzania) has been nominated an Ashden Award (winners to be announced on June 21 in London) that recognizes outstanding sustainable energy projects. Zara sold over 3,600 solar PV systems, benefiting 18,000 people. It is estimated that 10% of the country and only 2% of rural population have access to the electricity grid.
– Fastracking of teachers to fill acute shortages at newly built secondary schools may be lowering the quality of education.
– USAID has commissioned a 2 year environmental education program that will be administered by the Jane Goodall Institute.
– The World Bank will offer vulture aid to help developing countries stuck with high & expensive commercial debt following an infamous fleecing case of the Zambia government by a European investment- vulture fund.