CMC share suspension to be extended over audit reportJan 18th, 2012 | By MrJob N. Okemwa | Category: Media Release
The suspension of CMC shares from trading at the Nairobi Securities Exchange (NSE) is set to be extended beyond the January 26 deadline after the regulator announced that findings of an ongoing forensic audit will be released in the first week of February.
According to the Capital Markets Authority (CMA), the lifting of the suspension is tied to the report which it expects to receive this Friday before studying it for another two weeks.
Trading in CMC shares was suspended on September 17 last year following a boardroom war that led to the ouster of the company’s chairman, Peter Muthoka, over alleged conflict of interest and over-billing of the auto firm, claims which Mr Muthoka has denied.
“The lifting of the suspension is tied to the report findings and therefore if need be, we will extend the suspension but for a short period only until we have reviewed the recommendations,” said Kung’u Gatabaki, the CMA chairman:.
This means that investors in the counter will have to wait longer to trade on their share, which stood at Sh13.50 and have weathered the bear run at the NSE to gain 29.19 per cent.
The freeze in trading is aimed at preventing the dumping of the auto firm shares by investors acting on the negative reports, culminating in a share price erosion and accumulation of shares by long term investors.
“We cannot allow a section of investors to stock up on shares at a time its value has plummeted since minority shareholders who would be dumping due to the bad publicity will not get value for their money,” said Mr Gatabaki.
Trouble at the automaker came to the fore when the board ousted Mr Muthoka and replaced him with Joel Kibe on September 8.
CMC management had accused Mr Muthoka of defrauding CMC of millions of shillings in inflated billings through his logistics firm Andy Forwarders, which held the biggest supply contract with auto firm. Mr Muthoka, who is the single largest shareholder at CMC with 24.7 per cent, then called an extraordinary meeting for December 21 to oust Mr Kibe and three other directors- Paul Wanderi Ndung’u, chief executive Bill Lay, and Andrew Hamilton.
The court blocked the shareholder meeting following a CMA petition on grounds that it would hamper the audit. The troubled firm has issued a profit warning for the year ended September.