By Samuel Sanya
City business Mogul, Sudhir Ruparelia has sold all his shares in British American Tobacco Uganda (BATU) for nearly twice their market value to British THS Kingsway fund.
Sudhir made sh11.8b from the sale of 2,985,726 shares for sh4, 000 per share on Friday morning. The shares were selling at sh2, 600 on Wednesday.
The deal comes hot on the heels of a profit warning by BATU on Saturday. The company’s financial books indicate a fall in half year after tax profits to sh4.9b from sh8.1b.
“The profit warning is a short term thing, the British investors are looking at the long term,” a source privy to the deal said.
This is the second biggest deal closed on the Uganda Securities Exchange since the sale of dfcu bank shares to Dutch investors for sh111.9b in May.
A Supreme Court case, costs related to the decommissioning of the Kampala processing plant, and an increase in illicit cigarette trade affected improved revenues of sh168.9b.
Jonathan D’Souza, the BATU boss noted at a media briefing to discuss the company’s half-year results that the illicit cigarrette trade in Uganda has hit 20% and is higher than Kenya’s 10% average.
“Most of the illicit cigarrettes are from South Sudan. We need the governments of Uganda and South Sudan to take action,” he said.
D’Souza noted that the company’s Kampala premises will be put on the market after a lengthy decommissioning exercise is completed. Staff will be moved to an alternative location.
He pointed out that the high weighted average cigarette taxes of 42% coupled with the imposition of East African Community External Tarrif rates are increasing smuggling and affecting sales.
The company’s tax contribution to government declined by 17% at the end of June 2013. The company has also slashed its number of contract farmers to 18,000 from 80,000.
“We are here for the long haul. We intend to operate as a lean, mean machine,” said Paul Claude Sine, the BATU finance director.