Following the successful completion of negotiations, the Zambia Privatisation Agency is pleased to announce the sale of Government's 34% shareholding in Kafironda Limited (Kafironda) to ICI Explosives (Africa) Limited (ICI Explosives).
The class B shareholders of the company, Covilink Limited and Cobar (Overseas Holdings) Limited agreed to waive their preemptive rights on the shares on offer in favour of ICI (a Principal shareholder in Covilink and Cobar).
The Minister of Finance Hon. R.D.S. Penza has signed the Sales Agreement
after receiving clearance from the Attorney General. The sale will achieve
one of the ZPA's prime objectives, that of increasing investment in the
country.
Covilink and Cobar have also completed the sale of their 46% shareholding
to ICI Explosives (Africa) Limited.
The deal was negotiated on behalf of the ZPA by an independent negotiating team led by Mr. Charles Sichangwa as team chairman. The ICI team was led by Mr. David Bromley, the then Commercial Director of AECI Explosives, Mr. Anderson Mazoka, Managing Director - Anglo American Corporation (Central Africa) Limited and Mr. David Whitewood, Financial Controller, ICI Explosives.
The independent negotiating team relied on the independent valuation conducted in terms of the Privatisation Act by Deloitte and Touche. Kafironda was incorporated as Chinza Limited on 20 December, 1963. The name was later changed to Kafironda Limited on 12 September, 1967.
Kafironda Head Office and explosives factory are located in the Copperbelt town of Mufulira. Its major business is to manufacture commercial explosives and accessories, and trading in related imported products.
The ZPA Board gave a negotiation mandate to the Kafironda negotiation team aimed at ensuring that the company was sold in accordance with its Articles of Association. The Articles provided to Covilink Limited and Cobar (Overseas Holdings) Limited rights of preemption over the Government shares in Kafironda. The team was mandated to make a sale at a price to be determined by independent valuers.
34% shares in Kafironda held by the Government were offered to Covilink and Cobar in July 1995 who waived their rights in favour of ICI Explosives. Following extensive negotiations ICI Explosives and the Zambia Privatisation Agency agreed to a price.
ICI Explosives (Africa) Limited is incorporated in England and is a wholly owned subsidiary of AECI Explosives Limited of South Africa. The acquisition of the shareholding in Kafironda is a testament of their confidence in Zambia.
In addition to purchasing the equity, ICI has undertaken certain commitments regarding the investment. Kafironda's existing program to complete the exit from the manufacture of nitroglycerine (NG) based explosives, will be accelerated, including the necessary site remediation and rationalisation of the workforce.
Government shares in Kafironda were sold for a price consideration of US $783,902 and full consideration has been paid. ICI have also agreed to allow the Zambia Privatisation Agency to float 20% shares to the public in the future. This will help achieve another of ZPA's objectives; to provide for wider share ownership which should help to improve earnings of the Zambians.
Benefits for Zambia
The transaction consummated with ICI Explosives should in the longer term lead to the realization of the following benefits for Zambia:
ZPA Board Objectives
The ZPA Board had set the following objectives to be achieved in the privatisation of the explosives sector:
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