Formerly EVEREADY BATTERIES KENYA LIMITED) (Incorporated in Kenya on 6Th March 1967) (Registration Number C7076) (“Eveready” Or the “Company”)
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EVEREADY EAST AFRICA LIMITED (Formerly EVEREADY BATTERIES KENYA LIMITED) (Incorporated in Kenya on 6th March 1967) (Registration number C7076) (“Eveready” or the “Company”) PROSPECTUS in respect of ADMISSION TO LISTING of Eveready’s 210,000,000 issued and fully paid up ordinary shares (“Shares”) to the Main Investment Market Segment of the Nairobi Stock Exchange (“Listing”) and AN OFFER FOR SALE by the current shareholders of Eveready of 63,000,000 shares with a par value of one Kenya Shillings (KShs 1.00) each (“Offer Shares”) in the ordinary share capital of Eveready at an Offer Price of Kenya Shillings 9.50 per ordinary share comprising a public offer of 30% of the issued ordinary Eveready shares (“Offer”) and incorporating A Share Application Form Offer opens 13 November 2006 Offer closes 24 November 2006 Proposed Listing Date 18 December 2006 This Prospectus is issued in compliance with the Companies Act (Cap 486), the Capital Markets Act, (Cap 485A) and the Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations 2002. IMPORTANT NOTICE This document is important and requires your careful attention. Prospectus overview This document is a Prospectus inviting the public to subscribe to the Offer Shares in Eveready East Africa Limited under terms outlined herein. If you are in doubt as to the meaning of the contents of this Prospectus or as to what action to take, please consult your accountant, bank, lawyer, stockbroker or other professional advisor. If you wish to apply for shares in terms of the Offer, then you must complete the procedures for application and payment set out in section 1.7 of this document. Registration and approvals A copy of this Prospectus together with the documents required by section 43 of the Companies Act, have been delivered to the Registrar of Companies at the Attorney General’s Office for registration. The Capital Markets Authority (“CMA”, the “Authority”) has granted permission for the Listing and Offer of the Eveready shares at the Nairobi Stock Exchange (“NSE”, the “Exchange”). As a matter of policy, the CMA assumes no responsibility for the correctness of any statements or opinions made or reports contained in this Prospectus. Approval of the Offer and Listing of shares is not to be taken as an indication of the merits of the issuer or of the securities. Approval has been obtained from the NSE for the admission of Eveready’s entire issued ordinary shares in the Main Investment Market Segment (“MIMS”). Subject to compliance with the NSE listing rules, the NSE will admit the issued share capital of Eveready under the abbreviation “Eveready“. The existing shareholders of Eveready and the Board of Eveready have approved the Offer. Dividends It is anticipated that the first dividend payable to Eveready shareholders following the Offer and Listing will be in respect of the year ended 30 September 2006. Rights and transfer The Offer Shares will carry the right to participate in all future dividends to be declared and paid on the ordinary share capital of the Company. The Offer Shares rank pari passu with the other shares of Eveready and each share carries one vote at a general meeting. After the closing of the Offer, the ordinary share capital of Eveready will comprise 210,000,000 authorised, issued and fully paid ordinary shares with a par value of Kenya Shillings 1.00 each. These shares will be freely transferable and will not be subject to any restrictions on marketability or any pre-emptive rights. This Prospectus contains information that is provided in compliance with the requirements of the Companies Act and the Capital Markets Act as well as the rules and regulations made there under. The current Directors of Eveready, whose names appear in section 6.1.1 of the Prospectus, accept responsibility for the information contained in this document. To the best of the knowledge and belief of the Directors (who have taken reasonable care to ensure that such is the case), the information contained in this document is in accordance with facts and does not omit anything that is likely to affect the importance of such information. Reporting Accountant’s opinion This Prospectus contains a statement from Deloitte & Touche, the Reporting Accountants, which constitutes a statement made by an expert in terms of Section 42(1) of the Companies Act. Deloitte & Touche have not withdrawn their consent to the issue of the said statement in the form and context in which it is included in Section 12 of this Prospectus. Legal Advisor’s opinion Hamilton Harrison & Mathews, the Legal Advisors, have given and not withdrawn their written consent to the inclusion in this Prospectus of their letter and the references to their names, in the form and context in which they appear and have authorised the contents of their letter set out in Section 13 of this document. 1 LETTER FROM THE CHAIRMAN Dear Investor, On behalf of my fellow Directors and current shareholders of Eveready East Africa Limited, I am delighted to offer you this opportunity to invest in our Company. Under the Offer, we are inviting the public to share in the future of Eveready, by investing in up to 30% of the Company’s share capital. Subsequently, on successful conclusion of the Offer, Eveready will have 30% of its equity publicly held with the remaining 70% held by the current shareholders of the Company. The Offer and Listing of Eveready shares will also contribute to the development of the Kenyan Capital Market, by increasing the number of listed companies on the Nairobi Stock Exchange and widening investment choices to meet an increasing demand for attractive investment opportunities. The Directors also believe that listing on the Nairobi Stock Exchange will offer significant benefits to the Company and its shareholders. These include: Enhancing the profile of Eveready; Allowing for "price discovery" whereby shares are valued by the market at large; Attracting additional shareholders who otherwise may not invest in an unlisted company; and Being well positioned to raise capital in the future should the need arise. Eveready has 39 years of experience in the battery industry in Kenya, within which the Company has not only developed a profitable operation, but has also clearly established its prominence in the regional battery industry. Key attractive features of Eveready include: Eveready’s strong partnership with Eveready Battery Company USA governed by a technical services agreement between the Company and EBC that allows for transfer of technology between our two organisations as well as the provision of technical services. Eveready’s financial performance illustrated by a history of consistent profitability for over 30 years. Over the years, the Company has adapted its business model to respond to competition and various industry challenges and consequently diversified its income base and implemented operational cost controls that have seen it remain profitable. Eveready’s continuous enhancement of shareholder value through its dividend payment policy driven by the performance and investment requirements of the Company. Eveready’s established market leadership position. The Company’s ability to quickly respond to changing market dynamics has enabled it to capture and maintain significant market share in various market segments across the industry. With its strong heritage, the Company is well positioned to respond to and take advantage of key industry developments that will enable it to maintain its profitability and market leadership. Earnings sustainability will be driven by focusing on production efficiencies through continued implementation of cost cutting initiatives and developing product and market diversification opportunities. Initiatives to drive these strategies have already been identified and are in the process of being implemented by the Company. Details of the Offer and the Company's operations and performance are set out in the Prospectus and I encourage you to read it in full before making a decision to invest. I recommend the Offer to you and look forward to welcoming you as a shareholder of Eveready East Africa Limited. Yours sincerely Naushad Merali, CBS Chairman of the Board of Directors 2 TABLE OF CONTENTS Section Page ADVISORS FOR THE OFFER.................................................................................................................................................. 4 DEFINITIONS AND ABBREVIATIONS............................................................................................................................... 5 1. OFFER DETAILS................................................................................................................................................................. 7 2. INCORPORATION, COMPANY STRUCTURE AND CORPORATE INFORMATION ................................... 18 3. COUNTRY OUTLOOK.................................................................................................................................................... 22 4. BATTERY INDUSTRY OVERVIEW ............................................................................................................................. 26 5. EVEREADY OVERVIEW................................................................................................................................................. 30 6. DIRECTORS AND EMPLOYEES .................................................................................................................................. 44 7. FUTURE OUTLOOK .......................................................................................................................................................