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Citadel to control Rift Valley Railways

By Vision Reporter

Added 25th March 2010 03:00 AM

THE shareholders in the Rift Valley Railway (RVR) consortium have agreed to re-structure by mid-April. The move will see Egyptian equity firm, Citadel Capital, become the majority shareholder.

THE shareholders in the Rift Valley Railway (RVR) consortium have agreed to re-structure by mid-April. The move will see Egyptian equity firm, Citadel Capital, become the majority shareholder.

By Ibrahim Kasita
and Osere Emojong

THE shareholders in the Rift Valley Railway (RVR) consortium have agreed to re-structure by mid-April. The move will see Egyptian equity firm, Citadel Capital, become the majority shareholder.

RVR shareholding is composed of Citadel Capital, TransCentury, Mirambo Holdings, Prime Fuels, Austrialia’s Babcock and Brown, plus a Ugandan investor. The consortium was contracted by the Kenyan and Ugandan governments to manage their railways in 2005.

A joint statement from Citadel Capital and TransCentury, the key rivals battling for the RVR ownership, said a new shareholder structure was being negotiated and would be concluded next month.

“When negotiations are completed, the shareholding structure in RVR will have Ambience Ventures (subsidiary of Citadel) 51%, TransCentury 34% and a Ugandan investor, Charles Mbire, 15%.”

However, the fate of Mirambo Holdings (15%), Prime Fuels (15%) and Australia’s Babcock and Brown (10%) and Centum (5%), the other RVR shareholders, was not yet clear.


At the moment RVR is currently owned by Sheltam with a 35% stake, TranCentury with a 20% stake and the other partners collectively holding a 45% stake.

The battle for control of the firm has however been tilting in favour of Citadel Capital, the Egyptian firm that entered the scene with the acquisition of a 49% stake in Sheltam, the lead investor in RVR.

Citadel and TransCentury have been battling for control of the rail firm since November last year delaying implementation of the turnaround plan for the railway.

On Tuesday, TransCentury and Citadel said they had agreed to restructure the ailing rail operations under a $250m capital expenditure to jointly upgrade both the rail track, wagons, and train engines.

This represents $100m over the $150m plans in Kenya Uganda Railways in the next five years announced by Citadel Capital soon after acquiring a17.5% indirect stake in RVR, last November.

Apart from capital injection to the business, the two private equity funds said they will jointly strengthen the company’s management and provide the required technical expertise as well as participate in the development of a safer, modern rail track.

In 2009, RVR closed the year with a loss of $17.5m on revenues of $56.1m, driven by stagnant revenues on reduced customer numbers.

Businesses are frustrated that while rail transport is cheaper than road, most cargo is being hauled on road denying them the edge in a regional market that is becoming increasingly competitive.

Citadel to control Rift Valley Railways

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