The market, Thurday, shrugged off listed energy firm, Eveready, announcement for an extra ordinary general meeting to seek shareholder approval for disposal of its prized land asset in Nakuru.
By close of trading, the stock had even lost 2.44 percent of its value to Sh2.00 from Sh2.05 the previous day.
In the general meeting notice published on 8 September 2016, the Company will also seek to change its name to Eveready East Africa PLC.
“The Company’s levels of borrowing are unsustainable and the persistent high interest rate regime continues to hurt our business and erode shareholder value,” said Eveready Managing Director Jackson Mutua in a statement sent newsrooms later in the day justifying the plan to sell the land.
According to the published accounts of 2015, the company spent Sh104.1 million on finance costs due to its borrowing levels which include a foreign denominated currency component which contributed significantly to the loss recorded in the year. The Company was profitable at operations.
“This sale is also part of management’s strategy to unlock funds for investment in more productive areas of the company” said Mutua.
The 18.5 acre property has been largely idle since the company closed its manufacturing facility in 2014.
“A feasibility study conducted on the property failed to give an unequivocal go-ahead for the development of a mixed used complex. Investing in a distribution centre in Nairobi complements our retail model and eliminates our property leasing costs,” said Mutua.
Eveready’s business model changed to a retail one with the cessation of manufacturing in 2014.
In a bid to diversify its revenue streams, the firm recently signed a partnership with Clorox Sub Saharan Africa Ltd to distribute the Clorox® bleach in the Kenyan market. It has also introduced its own brand of powder washing detergent, Everclean® to the Kenyan consumer.
Mutua said “Eveready’s strength continues to lie in its distribution infrastructure. We intend to continue to leverage on this strength in order to grow our business”.
According to the published notice, the general meeting will take place on 6 October 2016