Class B investors who invested their money with Amana Capital’s Amana Shilling Fund (ASF) will be forced to forfeit Ksh255 million, a 59 per cent of the total unit share value of Ksh434 million.
In an annual communique to investors, Amana Capital announced that it had impaired the amount, which was lost on paper after chain retailer Nakumatt went down, where the Capital had invested Ksh500 million.
An impairment happens when the sum of estimated future cash flows from an asset is less than its book value.
Amana had invested the amount with Nakumatt Holdings Limited Commercial paper program
(NHLCP), but the money sunk with the retailer.
“Following the directive by the Trustee, Natbank Trustee and Investment Services Limited (‘NTISL’) provisions of IFRS 9 and the regulator, CMA, the fund sponsor has impaired the gap of Kshs two hundred and fifty – five million (‘Kshs 255mn’) which represents 59% of class B units. Every unit holder will have their investments in the ASF Class B impaired by 59%,” the communique read in part.
The investors now remain with only Ksh179 million, which has been divided into two, and only Ksh16 million is redeemable on proportion of one’s investment.
“Redemptions will be considered after the AGM. Unitholders wishing to redeem are advised to put in fresh redemptions requests against the Ksh16 million that is currently invested in fixed deposits at Co-op Bank and I&M Bank in proportion to their shareholding of the funds available,” added the statement.
Ksh163 million is held in fixed deposits at Kingdom Bank (formerly Jamii Bora Bank), which was recently acquired by Co-op Bank.
Amana’s shilling fund has remained frozen for the last two years.
Graham Shaw, the chairman of Amana Capital was accused of investing Ksh500 million with Nakumatt Supermarket without any analytic data, just because he knew Nakumatt directors personally.
In an Extraordinary General Meeting (EGM) held in February, ASF survived liquidation after investors worth Ksh218 million out of Ksh278 million voted for the extension and creation of Class C share, where any other funds received will be used.
Following the expiry of a six-month moratorium in August, the 1,400 investors have been given three options, all of which they would lose a portion of the money invested.
In the first option, the investors’ funds will be converted into shares at the Amana Capital Ltd (ACL), with a cumulative stake of 30 per cent. Each investor’s fund will be slashed by 59 per cent.
“The 30 per cent equity shares will be issued proportionally to individual holdings of funds lost in the
Amana UTS Shilling Fund Class B,” adds the statement.
ACL says that a new investor has been identified to take up a 60 per cent stake (down from 70 per cent), while the existing shareholders’ ownership will be reduced from 100 per cent to 30 per cent and further to 10 per cent.
“The new investor will through its local networks attract new funding in the targetted amount of Ksh300 million to be managed by ACL as the fund manager. The funds will be sourced
within 60 days of the equity conversion date,” ACL says.
In the second option, the new investor and existing shareholders would propose to dilute their shareholding to 51 per cent and issue new shares worth 49 per cent to the unitholders (Class B investors).
Once the shares are diluted, the preference shares currently issued to the new investor in ACL would be redeemed and not converted into equity, resulting in the new investor’s automatic exit from ACL within a maximum period of one year.
In case the unit holders reject the two options, they can go for liquidation which will see them completely lose the amount in question.
The current move comes days after ACL wrote off 29 per cent of investment by Class A investors.