KENYA – British firm Ekaterra Holdco UK Limited has proposed a debt-to-equity conversion deal to increase its stake in Lipton Teas and Infusions Kenya, subject to shareholder approval.
The move, involving the conversion of a KES18.59 billion (US$141.91 million) loan into equity, aims to bolster Lipton’s capital structure and reduce its debt burden.
The proposal will be put to a vote at a virtual special general meeting (SGM) scheduled for Tuesday, July 21.
If approved, the deal will see the creation of 17.47 million new shares, which will be allocated to Ekaterra, increasing Lipton’s share capital to KES674 million (US$5.14 million), with each share valued at KES10 (US$0.038).
This adjustment will significantly cut the outstanding debt on Lipton’s books, which had been extended to the firm to cover working capital requirements.
Lipton Chairperson Gerridina Ten-Den explained that while the business had achieved improved efficiencies, its current financial position made it challenging to service the loan as originally agreed.
“Once the shares are issued to Ekaterra Holdco UK Ltd, the debts owing to them from the company (Lipton) will be considered settled,” Ten-Den stated.
Ekaterra, a significant player in the global tea industry, operates the Lipton brand, with estates in Kenya that include 11 plantations and eight factories in Limuru, Kericho, and Bomen.
The proposed debt conversion is part of a broader strategy to enhance Lipton’s operational flexibility and financial stability.
Meanwhile, Sri Lanka’s Browns Investments earlier announced an agreement to acquire Lipton tea companies in Kenya, Tanzania, and Rwanda from their UK and Netherlands-based parent companies.
This transaction will give Browns control of 100 percent of Lipton Teas and Infusions Tanzania Ltd and 98.56 percent of Lipton Teas and Infusions Kenya, which spans 14,100 hectares with an annual production of 33,000 kilograms of tea.
Lipton Teas and Infusions Kenya also holds 52 percent stake in Limuru Tea, listed on the Nairobi Securities Exchange.
However, Lipton’s bid to acquire the remaining shares in Limuru Tea was blocked by the Capital Markets Authority (CMA).
The proposed sale sparked controversy among the Kipsigis clan in Kericho County, who claim the land on which the estates are located belongs to them and assert they were not consulted in the sale process.
Richard Langat, the Borowo sub-clan leader, criticized the lack of transparency, demanding details on the sale criteria and public participation, and called for 100 percent ownership shares to address historical land injustices and forced evictions.
Liked this article? Sign up to receive our email newsletters with the latest news updates and insights from Africa and the World. HERE
