How British firm sold a billion dream venture without trace

Otiato Guguyu How does one misplace a logistic company named after maps, listed in both Nairobi and London stocks exchanges, and still vanishes in thin air. The British firm, Atlas, that was delisted from the Nairobi Securities Exchange (NSE) last week, just vanished with Kenyan investments, supplier debt after a quick succession of closing down its operations in Kenya, its website and the resignation of its contacts in both London and Nairobi. In December 2014, Atlas Development and Support Services announced it had raised Sh450 million through private placement to Kenyan investor selling 39 million shares at Sh11.50 each. At the time, the firm said it had a presence in Kenya, Tanzania, Djibouti, Mozambique and Ethiopia with 700 workers. It promised to build a Sh180 million logistical hub in Lokichar Turkana county and promised Sh6 billion in investments over five years. “Atlas has invested Sh1.4 billion ($ 15 million) in Kenya over the last 12 months and plans to invest over Sh4.5 billion ($50 million) in Kenya over the next five years. We’re Kenyan-headquartered and our core operation was founded here in Nairobi. Today we’re proud to also call ourselves a Kenyan-listed company,” Atlas CEO Carl Esprey said on December 17, 2014. In five years, the promise has turned sour and debts of up to Sh400 million were owed to creditors including Sh1.5 million to the Turkana County government. Atlas left a string of creditors behind, 1,053 shareholders who could not trace it and a regulator who decided to admit the firm no longer exists. According to NSE, the company is closed down having been struck off the register under the Guernsey laws thus ceasing to exist as a company. Atlas announced it would leave the Kenyan market in 2015 and shut its subsidiaries — Ardan Logistics Kenya Ltd, Ardan (Medical services) Ltd, and Ardan (Civil Engineering) Ltd to relocate to Ethiopia. Apparently, most of the firm’s creditors may have invoiced the Atlas’ subsidiaries which were liquidated by December 2015. While Kenyan officials may have been diplomatic on the firm, Ethiopian tax officials chose a radical move and seized  Sh241 million ($2.4 million) from bank accounts of its subsidiary TEAP Glass Plc. Holding company This was over a tax claim on Ardan Risk & Support Services which Atlas acquired in 2013, and used it to acquire Ardan Logistics Kenya (ALK), a separate holding company to run the business. Atlas had just discontinued operations of its Kenyan subsidiaries (ALK, Ardan (Civil Engineering) Ltd and Ardan (Medical Services) blaming a tough operating environment. Ethiopian Revenue and Customs Authority (ERCA) ignored the complex web of affiliated firms and took the money prompting the British firm to threaten to use diplomatic and political pressure on Ethiopia to return the cash. “The board assures shareholders that it will take all available steps to ensure that the company’s funds are returned and the board is currently exploring legal, diplomatic and political routes in order to seek redress,” the statement to NSE read. The assurance, however, held for shortly and in five months, regulators realised the company’s contacts in London had suddenly quit and they could not find a replacement. British officials then chose to suspend 1.4 billion shares of the company trading in the London Stocks Exchange. “In October 2016, the firm’s shares were suspended from trading in the London Stock Exchange after the resignation of it’s Nominated Advisor, Stifel Nicolaus Limited,” NSE said. By May 2017, the British delisted the firm and at the end of the month, its shares at the Nairobi bourse were also suspended. Its Kenyan nominated contacts I&M Burbidge also resigned in June. Atlas then wrote to NSE and the Capital Markets Authority to close operations and settle with shareholders and then went silent. No updates have been made by the company to the shareholders and the public regarding their closing down process. The website, www.atlassupport.com went down in 2018 and not even the regulators could reach the once-promising investment prospect. “Driven by strong values of protecting shareholder interest, the NSE held collaborative discussions with I&M Burbidge Capital (former Kenyan nominated advisor) to establish the viability of investors receiving back their funds. It was established that the company is yet to receive any monies from its key investments,” NSE said. The NSE now says that should any recovery of monies be made by the company, the firm could be brought back to the register, subject to Guernsey law and redistribute the surplus funds to shareholders through a solvent liquidation. The delisting of Atlas may bring back focus to the handling of companies listed on the Growth Enterprise Market Segment (‘GEMS’) where slack regulation has been used to allow for aspiring firms to get listed. “I don’t think the delisting will have a significant impact on investor confidence in the market. The reality is that money is lost and made in the market and the biggest chunk on investors (foreign and local institutional investors) have come to terms with,” said Harrison Gitau Head of Research, ApexAfrica Capital Ltd. “That being said, I think the market pricing has mechanisms to weed out mispricing in the market which has seen most of the GEMS stocks suffer. The business environment has also been very harsh on the small companies which have affected their performance at the bourse,” he said. The Gems section, which was expected to list 19 firms by 2017 and 39 listings by 2023 has only attracted five firms since it was launched in 2013. In 2016, only one firm, K-Shoe, subscribed to the market joining HomeAfrica, Kurwitu Ventures, Flame Tree Group, and Atlas Development in the segment. K-Shoe, operating under Nairobi Business Ventures at the bourse, has dropped in share price from Sh8 to 95 cents while Home Africa is trading at 49 cents a share, from a high of Sh25 in 2013.  Flame Tree Group is trading at Sh2.74 while Kurwitu is not changing hands.