into a legal fight with the government over a Sh4.7 billion contract.
There has been much talk about this but nothing was confirmed till the wee hours of this morning and the media went into a frenzy as the Japanese are not known for making sales that would bring them any kind of extra work once done and definitely not sales that would end up going to legal battles.
The latest regulatory filing of Seven Seas with the Registrar of Companies Company shows that Toyota Tsusho has transferred its entire stake of 9.5 percent in recent months. A 21 percent stake held by private equity firm Actis has also changed hands. The was previously owned by collapsed Dubai-based firm Abraaj.
The shareholder exits followed a two-year legal battle between the government and Seven Seas over the cancellation of the contract to wire 98 State hospitals that, among others, allowed remote treatment or telemedicine.
Michael Macharia, the CEO and co-founder of SevenSeas made a statement to the media as he could not hold of the media storm “The institutional investors exited because of reputational risks. They don’t like drama, I bought the shares when the shareholders said they were seeking out,”
Toyota Tsusho through its subsidiary, CSV Africa, a venture fund it established in 2014, bought the 9.5 percent stake in 2016 for Sh300 million, valuing Seven Seas at Sh3.2 billion at the time. Toyota Tsusho described CSV Africa as a fund for social contribution for creating jobs and economic independence in Africa and invested in agricultural projects in Zambia and leather sewing business in Ethiopia.
Private equity firm Actis got the 21 percent stake in 2019 after it acquired the rights to manage funds privately owned by Abraaj, which was the largest buyout fund in the Middle East and North Africa until its collapse in 2018.
In the legal battle, Seven Seas secured a round one win against the government after it was awarded Sh1.6 billion over the botched IT deal.
Retired judge and now arbitrator Aaron Ringera found the State at fault in terminating the Sh4.7 billion contract that demanded Seven Seas provide the technology component of the Managed Equipment Service (MES) plan.
The Judge further went to explain the ruling stating that “And I have found that the Second respondent (Ministry of Health) was in breach of both payment obligations under the contract and the obligation to provide a government letter of support. Both defaults are material breaches of the Second respondent’s contractual obligations, it was the Ministry of Health’s default in providing the claimant with a government letter of support that prevented Seven Seas from achieving completion of the project,” he added.
