Kenya’s East African Breweries Ltd (EABL) said on Friday it would convert a loan to its Tanzanian business into equity, after reaching a settlement with the competition authority that had been investigating the transaction.
Tanzania’s Fair Competition Commission (FCC) threatened to revoke EABL’s 51 percent stake in Serengeti Breweries in 2015, accusing the Kenyan firm of not meeting several conditions. It did not make those conditions public.
“In early June, we managed to close and settle that matter,” Gyorgy Geiszl, EABL’s finance director, told a news conference, without giving a value for the loan.
EABL, a unit of Britain’s Diageo, made a provision in its financial year ending June 2016 to settle the issue so its figures for the year to June 2017 would not be hit, he said.
Geiszl said the settlement would allow EABL to “complete this capital restructuring, convert our loan to the company into equity, restore its equity position and profitability.”
He did not say what impact converting the loan would have on the size of EABL’s equity stake in Serengeti.
Serengeti, which contributed 9 percent to EABL’s group sales of 70.25 billion shillings ($676.46 million) in the year to June 2017, had a 28 percent share of the market, according to 2015 figures. Its sales dropped 13 percent in its latest financial year.EABL said it saw opportunities in the market in the medium term, while the settlement and capital restructuring would help the firm focus on boosting sales.