KenolKobil of Kenya to clear debt after exiting two countries

KenolKobil Ltd., Kenya’s biggest fuel retailer by market value, will use proceeds from the sale of its Tanzanian and Congolese operations to reduce financing costs after exiting regions its managing director said were rife with tax evasion.

The company said on Wednesday it had relinquished its shareholding in Kenol Tanzania, which operates 17 fuel stations, and in KenolKobil Congo SPRL, which owns a 4,000 cubic meter dry storage facility in Lubumbashi.

“There is a lot of tax evasion in those two markets and we don’t want to compromise ourselves,” Managing Director David Ohana said by phone from the Kenyan capital, Nairobi. “We are happy to exit the two countries.”

The company’s net debt reduced to 9.4 billion shillings ($92.3 million) in 2014, down 30 percent from a year earlier. Last year’s results will be announced in March, he said.

The deal had been in the offing for the last two years and KenolKobil fetched “great prices,” he said, without divulging figures. The company operates in seven other African markets including Uganda, Zambia and Mozambique.

Ohana planned to cut finance costs to little or nothing by the start of 2017, he said last year. KenolKobil had almost cleared dollar-denominated debt a year ago and would focus on chipping away at local loans, he said.

Nairobi-based Standard Investment Bank said in a research note it expects “the sale could constitute a material figure in cash flows received as well as gains on the assets disposal.”

The oil marketer’s shares were up 1 percent at 10.05 shillings by 12:45 p.m. in the Nairobi capital.