ACQUISITION OF MAJORITY SHARES IN CONSOLIDATED TYRE SERVICES LIMITED (CTS) BY AMON KAMBOLE SIKAZWE AND CHIBULU JANE PENZA

The Zambia Privatisation Agency (ZPA) is pleased to announce that the Minister of Finance has signed the sale agreement with Amon Kambole Sikazwe and Chibulu Jane Penza for the acquisition of CTS Limited.

CTS was formed by INDECO in 1972 to manufacturing capability to retread tyres for on and off highway vehicles and to trade in both local and imported tyres and batteries. The company was formed after taking over a number of companies by the State.

These companies were:

Amon Kambole Sikazwe and Chibulu Jane Penza have purchased 75 per cent of the majority shares in CTS Limited for a consideration of K1.6 billion on a total package basis, which is inclusive of legally binding investment pledges of approximately K889.6 million.

The purchasers are committed to reserving a maximum of 25 per cent of the total share capital for the management/employees of the company under a Employee Share Ownership Scheme(ESOS) to be established subject to satisfactory arrangements being made to finance the establishment of such an ESOS.

The purchase consideration is divided as follows:
 

KWACHA
Cash 760 million
Investments 889.6 million
CTS was locally advertised after the failure by the MBO Team to come up with a technical/financial partner capable of liquidating the Japanese commodity loan which was payable on privatisation.

The advertisement produced ony four (4) bids which were as follows:

CTS did not attract much interest among tyre manufacturing/ retreading companies targeted despite extensive direct marketing by the ZPA.

The company was on 19 March 1996 valued by Coopers and Lybrand on a going concern basis at approximately K682 million.

Once the ESOS is in place, the shareholding of CTS Limited is envisaged to be as follows:

The negotiations were conducted by an Independent Negotiating Team appointed by the ZPA Board. Dr. Henry Musenge of Mikwa Investments was the ZPA Board appointed Chairman for the Negotiation Team for the privatisation of the company.

The purchasers have undertaken to retain all the existing permanent labour force on their current conditions of service.

The purchasers have also pledged to continue to contribute to Zambia's industrial development and intend to increase investment for the rehabilitation and replacement of the aged equipment and expand the production capabilities of the company.

The future investment in the companyof K889.6 million is legally binding. The bidders will also immediately inject K1.5 million working capital to strengthen the company's financial position.

The rehabilitation and expansion programmes are intended to meet the ever growing needs of of the Zambian and regional economies.

The acquisition by the bidders of CTS Limited and the eventual set up of an ESOS marks yet another crucial achievement in the Zambian Privatisation Programme.

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