Coffee grower drops chair as Tatu stages coup

Rendeavour founder Stephen Jennings (right) flanked by Tatu City Limited Chief executive officer address a press conference in Nairobi on 14/05/2015 over Tatu city Sh9 billion land fraud case.PHOTO DAVID NJAAGA

Listed coffee grower Eaagads has dropped its chairman in a move reflecting broader changes as foreign shareholders take a tighter grip on Tatu City.

Company filings made on Thursday indicate that Lucas Omariba, who has previously doubled up as chief executive of Tatu City, had been replaced months after majority shareholder New Zealander Steve Jennings staged a corporate coup. Omariba was fired as the proposed city chief executive in March. The firm reported that board of directors met Wednesday and accepted the resignation by Mr Omariba even though the events of past months in the two companies he was a top official point to a different story.

Improved coffee prices in the international markets had helped the small company overturn a Sh41 million loss to report Sh4 million as net profit – in earning depressed by a loss in the fair value of the coffee bushes.

Eaagads was acquired from its Belgian majority owners Socfinaf in 2009 by a consortium of investors led by Mr Jennings and former Central Bank of Kenya Governor Nahashon Nyaga, who also bought several coffee estates around Ruiru where they are developing Kenya’s first private municipality - Tatu City.

Socfinaf’s 62 per cent stake in Eaagads- which is still listed at the Nairobi Securities Exchange, was bought at Sh6.3 billion ($62.5 million) at the current exchange rate, according to company filings. The funds were secured through a loan, which would be settled from proceeds of land sales, with the property serving as collateral. But delays in land sales, occasioned by shareholder disagreements and subsequent caveats, meant the loans could not be serviced prompting Jennings to invite other investors who would buy off the loan in exchange of equity. The buyout of the credit facility led to major changes in the shareholding structure of the firm and is now at the centre of the disagreements.

It is the acquisition that has been the source of the bad blood between the directors, with company’s local partners claiming that they had been short-changed, even though the available documentation does not support their claim of making any investment in the mega project. A sharp boardroom rift, occasioned by mistrust and counter-accusations of greed, has however caused what could be irreparable differences with Nyaga now battling charges of a Sh10-billion fraud relating to illegal annexation of the project land.

Industrial hub

The matter is still before a Nairobi Court pending determination and could be the stroke that dashed any real chances of mending relationships, Mr Jennings told the Standard on Saturday in a recent interview. Omariba has been aligned to Mr Nyaga’s camp, which could explain his departure amid the souring relations in the board that have held back the project by at least three years.

A breakthrough however, came mid-July when the project broke ground for the construction of the first homes, in a symbolic turn coming only a week before the historic visit by US President Barack Obama. American billionaire fund manager Frank Mosier has become one of the largest investors in financing the infrastructure development before the actual homes start springing up. Kijani Ridge is the city’s first gated community to be developed in the city that would also consist of a light industrial hub, office blocks and a golf course.

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