Money Markets
By DAVID HERBLING, hdavid@ke.nationmedia.com
In Summary
- Rea Vipingo’s stockholders could pay over Sh142.5 million in capital gains tax, based on the margins set to be made from the two offers of Sh70 per share by the Robinow brothers and Sh75 a piece by Centum.
- The stock last traded at Sh27.50 on the Nairobi bourse before it was suspended in November last year.
- Rea Vipingo has a total of 60 million issued shares.
Rea Vipingo
shareholders risk shouldering the newly introduced capital gains tax
(CGT) following multiple hiccups that have now pushed the takeover to
next year at the earliest.
A case before the regulatory tribunal can only take off end of next month after it was postponed last week.
The sisal firm’s nearly 6,000 owners could pay over
Sh142.5 million in capital gains tax, based on the margins set to be
made from the two offers of Sh70 per share by the Robinow brothers and
Sh75 a piece by Centum.
The CGT, applied at the rate of five per cent, is
based on profit booked. The Rea Vipingo stock last traded at Sh27.50 on
the Nairobi bourse before it was suspended in November last year.
“Unfortunately, due to the delays in completing the
takeover, it will be subject to the capital gains tax,” said Fred
Murimi, Centum corporate affairs director.
“There is uncertainty as to the application of
capital gains tax as there are regulations that are yet to be gazetted,”
he said, referring to confusion over the base value or period the
taxman will base calculations on.
The pain of paying the CGT comes as a big blow to
Rea Vipingo owners who have waited for more than a year as rival bidders
engage in a protracted bidding war for the control of the sisal estate.
Centum has petitioned the Capital Markets Tribunal
to throw out the bid by the Robinows’ — of Sh70 per share and a bonus of
up to Sh15 per share if they dispose of a portion of Rea Vipingo land —
saying the bid violates Kenya takeover rules.
“CMA fundamentally erred in law and in fact in
failing to appreciate that a promise for future disposition of the
proceeds from the sale of a company’s assets cannot constitute
consideration for a takeover offer and is in any event void for
uncertainty,” said Centum in its filings to the tribunal.
The case came up for mention last Tuesday but couldn’t proceed due to a quorum hitch after one member failed to turn up.
Another mention is set for January 27, 2015 to confirm whether all parties have filed their affidavits.
The capital gains tax comes as a fresh twist in the
intended sale of Rea Vipingo, which has attracted three suitors since
the Robinow brothers announced their intention to take over the company
last year.
If shareholders accept the Robinows’ offer, they
will have booked a gain of Sh42.50 per share based on the last price
while the Centum deal translates to a profit of Sh47.50 per stock.
Dividend
This translates to capital gains tax payable at Sh2.125 (Sh135
million CGT) and Sh2.375 per share (Sh142 million) respectively, which
could rise as most shareholders bought it at prices lower than the
closing one.
Rea Vipingo has a total of 60 million issued shares. It did
not pay dividend for the year ended September 2013, adding to the woes
of shareholders whose wealth has been rendered illiquid.
Rea Vipingo paid a dividend of Sh1.10 per share in
2012. Intense competition for Vipingo appears to be hinged on the
speculative value of the company’s vast land — nearly 70,000 acres in
Kenya and Tanzania — which independent analysts have valued at about
Sh10 billion.
Rea Vipingo says land under leasehold as at
September 2013 was valued at Sh208.03 million but did not declare the
market value of its freehold land.
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