Investment company Centum has acquired a controlling stake in Longhorn Publishers after buying shares worth Sh390 million in the just concluded rights issue.
Centum in an announcement published yesterday confirmed it had increased its stake in the Nairobi bourse listed publisher from 31.25 per cent to 60 per cent.
Centum had prior to the shareholders cash call announced it would bid for a majority stake in Longhorn, effectively making it the biggest subscriber of the rights issue that closed last week.
“Centum hereby announces to the public that following the recently announced concluded rights issue by Longhorn publishers and with the approval of the Competition Authority of Kenya, Centum has acquired effective control over Longhorn by acquiring 118,314,853 new shares in Longhorn,” said Centum in a regulatory notice on Friday.
Prior to the rights issue, Centum had 45,699,225 ordinary shares in Longhorn comprising 31.25 per cent of the total issued shares of Longhorn.
With the acquisition of 118,314,853 new ordinary shares, Centum now directly holds 164,014,078 ordinary shares comprising 60 per cent of the total shares issued by Longhorn.
Centum however ruled out a takeover bid for Longhorn.
PER REGULATIONS
As per Capital Markets Authority regulations, a person or firm with effective control of a listed company—holding more than 25 per cent or acquires more of the voting shares—and has no intention of making a take-over offer for the company must issue a public announcement declaring his lack of intent thereof and file for exemption from the regulator.
Two years ago, Centum successfully acquired a controlling stake in K-Rep Bank, now Sidian Bank, raising its shareholding from 7.54 per cent to 67.54 per cent. The investment firm had been a minority shareholder in Sidian (formerly K-rep) since 2004. The company is also currently undertaking capital-intensive real estate projects in Kenya and Uganda and has also ventured into the power sector.
It also has investments in Kenya Wine Agencies, Platcorp (the holding company of micro lender Platinum Credit) and UAP Insurance. The firm’s total portfolio was valued at Sh19 billion as at March 2013.
Longhorn Publishers had offered 126 million newly created shares to existing shareholders at a rate of 0.86 shares for every share held, with a target to raise Sh530 million. It raised Sh533 million.
Longhorn had said it would use up to Sh80 million from the rights issue for regional expansion, Sh100 million towards product diversification and another Sh100 million to retire current debt obligations.
The group managing director, Simon Ngigi, had said the firm will stick to the plans announced during the offer to grow its market share with an emphasis on digital product enhancement and regional diversification.
The publisher owed Sh100 million to Nabo Capital, a subsidiary of Centum, which deals in asset management for institutions and high-net-worth clients.
Longhorn has announced plans to launch new products including story books and college textbooks.
It also intends to develop proprietary e-learning platforms as part of its drive towards digital education content.
“At least 10 per cent of the funds raised will go towards enhancing our digital offering by increasing the number of titles we put into the market as well as developing a proprietary platform to enhance the disbursement of this content,” Mr Ngigi said.
He said the company was confident about the fundamentals of the business that primarily serves the education sector, which has 10 million primary school pupils and 3.5 million students in secondary schools.
Longhorn posted a 70 per cent jump in after-tax profit for the six months ended December, powered mainly by a 56 per cent increase in turnover.
The publisher’s net profit increased to Sh67.8 million compared to Sh39.8 million a year earlier.
