Rift Valley Railways, East Africa Line Operator, to Sign $164 Million Loan

Rift Valley Railways Ltd., the operator of the Kenya-Uganda rail line, expects to sign a $164 million loan with seven lenders within four months, according to its biggest shareholder, Citadel Capital SAE.

The funds will be provided by six development-finance institutions and Equity Bank Ltd. (EQBNK), Kenya’s biggest lender by market value, Karim Sadek, Citadel’s managing director in east, central and southern Africa, said in an interview today in Nairobi, the capital. Citadel is an Egyptian private equity company with $4 billion of assets.

“We are looking at a business plan that has roughly $287 million of capital expenditure,” Sadek said. “$164 million is a long-term loan. The balance comes from shareholders and internally generated profits.”

TransCentury Ltd., a Kenyan investment company that is one of the three shareholders in RVR, said on March 28 the rail operator plans to raise a total of $240 million. That figure was based on an earlier estimate, Citadel said in an e-mailed statement today.

RVR is mandated to manage about 2,000 kilometers (1,243 miles) of rail line in Kenya and Uganda, Chief Executive Officer Brown Ondego said on Nov. 8. In the year through June 2010, the company moved less than 1.2 million metric tons of cargo, against a target of 1.7 million tons set in a 25-year concession agreement that began in November 2007.

The investment will be spread over five years from when the loan is signed. RVR will spend the money on tracks, automation, rehabilitation of wagons and locomotives and purchase of new ones, he said.

Logistics Offering

Last year, the company signed a technical and management agreement with America Latina Logistica SA, the Curitiba, Brazil-based railroad company that is Latin America’s biggest.

“We are looking at offering our clients more of a door-to- door package,” Sadek said. “We are trying to move from this concept of being a rail operator to a logistics player.”

Citadel Capital owns 51 percent of RVR, while TransCentury holds 34 percent and Bomi Holdings of Uganda has 15 percent.

As of March 2010, Citadel Capital had investments worth more than $8.3 billion across 14 countries in Africa and a workforce of more than 30,000 people, the company said on its website.

“We are looking at a few opportunities, which obviously I can’t name, in and around East Africa,” Sadek said.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net.

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net

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