The proposed plan by Crown Paints Kenya to buy back its shares from shareholders could cost the company as much as Sh600 million ($5.79 million).
The paint maker plans to buy back a maximum of 10 million ordinary shares from existing shareholders and is keen to make the process a voluntary one, Business Daily Africa reported.
“We are not forcing anybody to sell shares, as a shareholder you have an option. We shall give a notice through CMA that Crown Paints want to buy this number of shares at this price between this and that date,” Crown Paints Group chief executive Rakesh Rao said during the company’s Annual General Meeting.
Rao emphasized that as part of the company’s effort to ensure the process is voluntary, if every existing shareholder remains unwilling to trade off their shares management will shelve its plans.
He went on to note that Crown Paints does not intend to delist from the Nairobi Stock Exchange, neither was it targeting minority shareholders after concerns were raised that the majority shareholders were allegedly looking to buy them out.
Currently, 81 percent of the paint maker’s shares—representing 58.2million shares—are controlled by just four shareholders.
But the firm, through its finance director Patrick Mwati, dismissed such allegations, explaining rather that the current shareholding capital structure requires management to release some of its reserves.