RVR shareholders to raise $10m
Aug 24, 2008
RIFT Valley Railways (RVR) shareholders have pledged to raise $10m as the embattled railway operator struggles to retain its contract and get more funds from international financiers.
By Mikaili Sseppuya
and Agencies      Â
RIFT Valley Railways (RVR) shareholders have pledged to raise $10m as the embattled railway operator struggles to retain its contract and get more funds from international financiers.
The operator of the Kenya-Uganda railways was given a deadline of October 31 by the two governments to inject $40m into the business or have its concession agreement cancelled for non-performance.
According to media reports, RVR’s new executive chairman, Brown Ondego, said the shareholders had given firm commitment to adequately capitalise the business, which would enable the International Finance Corporation (IFC) and Germany’s KfW give it more loans.
RVR had originally pledged to raise $28m by the beginning of their operations in 2006. This would have enabled IFC and KfW provide $64m.
However, it failed to raise the $28m and Roy Puffett, the managing director, blamed it on multiplicity of bilateral agreements. IFC and KfW had disbursed $10m and promised to release more money if RVR met certain conditions.
The conditions included conclusion of talks between existing and proposed shareholders as well as conclusion of the Partial Risk Guarantee and reimbursement of invoiced fees and expenses.
IFC insists that shareholders who have not paid for their shares, which amount to $47m, pay up before it disburses any money. Mirambo, one of the two shareholders who rejoined the consortium and has 10% shares, is among shareholders who have not paid.
The return of Mirambo Holdings and Prime Fuels as well as the urgency of finding new partners with capital mean that the shareholding of Sheltam is bound to be minimised and it may eventually pull out. Sheltam is the leader of the RVR consortium.
Sheltam is reportedly seeking changes in the concession agreement to prevent its shareholding from falling below 35%.
Also, another equity and trucking firm has expressed interest in joining the consortium and is ready to provide more capital. There is talk in Kenya that government ownership of railways is better.
and Agencies      Â
RIFT Valley Railways (RVR) shareholders have pledged to raise $10m as the embattled railway operator struggles to retain its contract and get more funds from international financiers.
The operator of the Kenya-Uganda railways was given a deadline of October 31 by the two governments to inject $40m into the business or have its concession agreement cancelled for non-performance.
According to media reports, RVR’s new executive chairman, Brown Ondego, said the shareholders had given firm commitment to adequately capitalise the business, which would enable the International Finance Corporation (IFC) and Germany’s KfW give it more loans.
RVR had originally pledged to raise $28m by the beginning of their operations in 2006. This would have enabled IFC and KfW provide $64m.
However, it failed to raise the $28m and Roy Puffett, the managing director, blamed it on multiplicity of bilateral agreements. IFC and KfW had disbursed $10m and promised to release more money if RVR met certain conditions.
The conditions included conclusion of talks between existing and proposed shareholders as well as conclusion of the Partial Risk Guarantee and reimbursement of invoiced fees and expenses.
IFC insists that shareholders who have not paid for their shares, which amount to $47m, pay up before it disburses any money. Mirambo, one of the two shareholders who rejoined the consortium and has 10% shares, is among shareholders who have not paid.
The return of Mirambo Holdings and Prime Fuels as well as the urgency of finding new partners with capital mean that the shareholding of Sheltam is bound to be minimised and it may eventually pull out. Sheltam is the leader of the RVR consortium.
Sheltam is reportedly seeking changes in the concession agreement to prevent its shareholding from falling below 35%.
Also, another equity and trucking firm has expressed interest in joining the consortium and is ready to provide more capital. There is talk in Kenya that government ownership of railways is better.