The Capital Markets Authority (CMA) has granted approval to Crown Paints Kenya Plc to undertake a rights issue to raise Ksh711,810,000 by issuing and listing 71,181,000 new ordinary shares on the Nairobi Securities Exchange. The rights will be issued on the basis of one new ordinary share for every one existing share.
According to the Information Memorandum, the main aim of the rights issue is to give the company financial flexibility to mitigate the challenges posed by the ongoing Covid-19 pandemic and boost the growth strategy for the company.
The Group’s management plans to use the rights issue funds to facilitate development of new products, retiring of current facilities, and funding regional expansion.
The CMA Chief Executive Officer, Mr. Wyckliffe Shamiah, observed that the disclosures made on the rights issue comply with the requirements of the Fourth Schedule to the Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations, 2002, and contain information that will enable investors to make an informed decision on the rights issue.
Mr. Shamiah added that the Authority had reviewed the application for exemptions from complying with Regulation 4 of the Capital Markets (Take Over and Mergers) Regulations, 2002 in relation to the intention of the company’s major shareholders, who have undertaken to take up their full rights entitlements. They are also willing to take more than their initial entitlements subject to availability during the rights issue.
Crown Paints Kenya Plc is expected to make bi-annual updates to the Authority on use of the proceeds of the rights issue in line with the disclosures contained in the Information Memorandum.