African Lakes in £7m funding
Article Date: Jul 03 2002Former trading and plantations group African Lakes aims to accelerate its development as an African internet and telecoms specialist with an investment from the International Finance Corporation (IFC) and AIG Africa Infrastructure Fund (AAIF) and an offer to existing shareholders. Together they could raise £7 million. Robert Tyerman reports.
Chaired by ex-Daily Mirror chief David Montgomery, loss-making African Lakes is disposing of its trading and plantation assets. Company spokesmen say this could provide the fully-listed company with up to £7 million.
With its shares at 7p, African Lakes is valued at £18 million. It is expanding in the African telecoms markets, which, it insists, are growing from scratch – unlike the saturated markets elsewhere in the world.
Under the deal, IFC, the commercial lending arm of the International Monetary Fund and World Bank, and AAIF, backed by US insurance firm AIG, will put £4 million into the company, at 8p a share, in two tranches of £2 million. The first tranche depends on African Lakes raising £1 million from existing shareholders. The firm proposes to tap them for up to £2 million at the same price.
IFC and AAIF, two of today's biggest investors in Africa, will also receive options to put a further £1 million into African Lakes at 10p a share. If all conditions are met, each group will hold 17.6 per cent of firm, whose largest holder, investment group Blakeney, has 22 per cent.
African Lakes lost £4 million in the year to September, on reduced turnover of £15 million. It halved its losses in the six months to March – to £1.8 million – on turnover slashed again to £5.9 million.
Deputy chairman Richard Wilkinson says the company's joint venture with WorldCom subsidiary UU Net is 'very cash-supportive' and provides it with access to Kenya and Zambia. The venture does not, he maintains, expose African Lakes to WorldCom's domestic problems. However, UU Net could be a logical fit if WorldCom chose to sell it.
African Lakes shares have plunged from more than 50p two years ago to 7p. Analysts expect them to rally sooner or later.
This story is from Growth Company Investor, the independent voice on fast-growing companies. Subscribe today for the latest AIM recommendations.
