Centum Investment Company experienced a further Kes 1.14 billion reduction in potential liability from the sale of its Coca-Cola bottling businesses during the year ending in March 2023. This is in accordance to the companies’ audit report. The sale involved a 27.6 percent stake in Nairobi Bottlers and a 53.9 percent interest in Almasi Beverages – the owner of Mt Kenya Bottlers, Kisii Bottlers, and Rift Valley Bottlers, which were sold to Coca-Cola Beverages Africa (CCBA) for Kes 19.3 billion.
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In line with this, Centum committed to providing a bank guarantee of Kes 4.9 billion to Coca-Cola Beverages Africa to cover potential claims, including any demands from the Kenya Revenue Authority (KRA). However, a Supreme Court ruling stopped the taxman from claiming taxes on the bottling firms, resulting in a previous reduction of Kes 3 billion in the guarantee. Now, after a comprehensive audit of the bottlers’ business assets, Centum’s liability has further decreased to Kes 710 million. Additionally, Centum had to write off Kes 334 million previously recorded as a receivable, given that there were no assets to be received.
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Centum’s CEO, James Mworia, stated that the reduced guarantee covers any potential litigation that may arise and is set to expire in 2025. The reduction in the guarantee has also led to a decrease in Centum’s finance costs. Despite the Kenya Revenue Authority’s attempt to seek Kes 5.6 billion in excise taxes on returnable bottles from the bottlers, the matter was resolved in favour of Centum through the Supreme Court ruling delivered on February 10, 2022. Centum’s potential liabilities were mitigated by its partial ownership of the businesses sold to Coca-Cola Beverages Africa (CCBA), which is predominantly owned by The Coca-Cola Company. To secure the required guarantee, Centum sought support from Stanbic Bank Kenya Limited and collateralized the facility with its marketable securities, including Treasury bonds.
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