Proposed Sale of Siret Tea Co
Kakuzi Ld
10 May 2007
KAKUZI LIMITED
PUBLIC ANNOUNCEMENT
Proposed Sale of Siret Tea Company Limited
The attention of the Directors of Kakuzi Limited ('Kakuzi') has been drawn to
the special report published in the Standard newspaper on 1st May 2007 entitled
'Shareholders claim shell game at Kakuzi'. This report entirely misrepresents
the nature of the proposed Siret Tea transaction and contains a number of
material inaccuracies. As required under the continuing disclosure obligations
of the Capital Markets (Securities) (Public Offers, Listing and Disclosure)
Regulations 2002, the Directors wish to provide the following clarifications.
1. The principal activities of Kakuzi comprise the following:
• The growing and marketing of avocados
• The cultivation, manufacture and marketing of tea
• Livestock farming
• Jointly controlled operations dealing with growing of pineapples
• Growing of other horticultural crops including citrus, fresh
pineapples and macadamia nuts
• Forestry development
2. These activities are undertaken on Kakuzi's various properties
situated at:
(a) Makuyu comprising 14,170 hectares of land including an Avocado pack
house and a timber treatment plant; and
(b) Nandi Hills comprising 1,954 hectares of land including the
Siret Tea factory and Estate (comprising 982 hectares) and
Kaboswa Tea Estate (comprising 972 hectares).
3. EPK Outgrowers Empowerment Project Company Limited (the 'Empowerment
Company') was incorporated on 3rd March 2006 (certificate of incorporation No.
C.2/2006) with the following founder members and directors:
• Mr. Wilson Malakwen Tuwei
• Mr. Paul Kipserem Tiony
• Mr. Paul Mugun Ngetich
• Mr. Daniel Kimutai Rotich
• Mr. Ketan Rameshchandra Shah
• Mr. Shabbir Hassanali Maloo
• Mr. Graham McLean
• Mr. Ken William Tarplee
4. At the time of incorporation, the Siret Tea transaction was not under
contemplation. The Empowerment Company was formed as an initiative designed to
assist outgrowers in the sale of tea under the umbrella of the Fair Trade
Labelling Organisation. The Fair Trade Labelling Organisation facilitates the
sustainable development and empowerment of disadvantaged producers by being paid
a fair price for their produce. The Kakuzi and Eastern Produce Kenya Limited ('
EPK') representatives were included to assist in the achievement of this
objective.
5. When the Siret transaction was under negotiation, it was considered
that the Empowerment Company would provide a suitable vehicle for the
acquisition by the outgrowers. At no time was it the intention that any
Director of Kakuzi or EPK would have any beneficial interest in the Empowerment
Company. The allegation that they are seeking to benefit from the sale of the
Siret Tea Estate is scurrilous and completely unfounded.
6. The Kakuzi / EPK directors resigned from the Empowerment Company
Board on 10th April 2007 prior to the execution of the Framework Agreement and,
at the same time, the Company Secretary was instructed to proceed with the
transfer of their subscriber shares to representatives of the outgrowers.
Particulars of the Directors resignations were filed with the Registrar of
Companies together with other associated changes in company secretary and
registered office. The changes in shareholdings will be reflected when the next
Annual Return is filed.
7. The Directors of Kakuzi wish to confirm that the proceeds from the
sale of Siret Tea Company Limited will be utilized to reduce the current level
of Kakuzi's borrowings and to finance the planned horticultural development
which has recently commenced at Makuyu.
8. The Directors of Kakuzi wish to emphasise that the Siret Tea
transaction remains subject to the obtaining of all necessary approvals,
including shareholder approval at the forthcoming Annual General Meeting. The
Framework Agreement is available for inspection at Kakuzi's head office by any
shareholder. The Directors will be pleased to address any shareholder concerns
at the Annual General Meeting.
G H Mclean
Group Managing Director
Nairobi
9th May 2007
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