By: IMMACULATE KARAMBU
Atlas Development and Support Services Limited, a UK company that is cross-listed at the Nairobi Securities Exchange, has announced it plans to acquire East Africa Packaging Holdings Limited (EAPH).
The logistics firm said it had signed an acquisition agreement with EAPH, which was established to build a bottle-manufacturing facility 45 kilometres north of Addis Ababa, Ethiopia.
Primarily focused on providing logistical services to Kenya’s oil and gas sector, which has been hurt by the drop in crude prices, Atlas said the acquisition will mark its entry into the industrial sector in a bid to broaden its revenue sources.
“With the acquisition of EAPH we will acquire an attractive cornerstone project for our industrial division in a dynamic jurisdiction with likely access to significant project finance funding,” said Atlas Chief Executive Efficer Carl Esprey in a statement released Thursday.
The acquisition is, however, subject to approval by shareholders of the logistics company, with the final decision on the matter expected after an upcoming shareholders’ meeting that will take place on an undisclosed date.
Atlas is betting on the proposed bottle-manufacturing company to tap into Ethiopia’s beverage consumer market to improve its cash flow.
During the year to June 30, Atlas reported a net loss of Sh1 billion, mainly attributed to cancelled contracts and lack of new logistics service contracts for oil and gas companies operating in Kenya.
In 2014, it reported a net loss of Sh147 million that was followed by a Sh609 million loss for the half-year period to December 2014.
The firm incurred Sh147 million in finance costs in the year to June 30 while its operating expenses increased to Sh1.2 billion from Sh262 million incurred in 2014.
Following the poor performance, Atlas’ management announced a plan to divert its resources from Kenya to Tanzania and Ethiopia.
“Recent months have been highly volatile and difficult for our business, particularly in Kenya.
“We have established a joint venture with Orchid and are presently working on projects in the Ethiopian resource space and hope to announce further news on these in the near future,” said Mr Esprey.
SOURCE: DAILY NATION