Atlas Development & Support Services Limited has announced the decision to place its loss making Kenyan subsidiaries into liquidation by way of a Creditors Voluntary Liquidation following the downturn in the oil and gas industry, market adjustments and the failure of certain key clients to settle debts.
Atlas Development adds it has seen increased creditor pressure has led to the decision to close Kenyan operations and focus all of the Company’s administrative functions and activities in Ethiopia for the time being.
According to CEO Carl Esprey this decision will enable the Company to focus its resources and management on the Company’s newly formed industrial division and its joint venture with Orchid Business Group targeting the resources space (in particular potash development and infrastructure projects).
“Since the downturn in the oil and gas market, we have found that clients are no longer placing a premium on our high quality services and are demanding terms which are not economically viable. In addition to this, late payment by certain operators and increasing creditor pressure in Kenya necessitate and justify this shift at this time to serve the best interest of the long term development of the business and shareholders,” says Esprey.
The closure of the Kenyan subsidiaries, Ardan Logistics Kenya Ltd, Ardan (Medical Services) Ltd and Ardan (Civil Engineering) Ltd Atlas says will improve the group’s overall cost base.
Atlas Development will however still maintain its listing on the GEM segment of the Nairobi Securities Exchange and hopes to maximise value for its Kenyan shareholders through the successful expansion in industrial projects and operations in Ethiopia. Following this latest announcement the shares of Atlas Development (ADSS) on the Nairobi Securities Exchange opened 8.57 percent lower than their previous value meaning Atlas has lost 85.77 percent since the beginning of the year.
“We have been focusing on building a strategy to best allocate our existing assets to build shareholder value and are looking forward to capitalising on opportunities within the newly established industrial division and the JV with Orchid, which we believe will bring more consistent revenue to the business and allow us to best utilise our existing expertise,” Carl Esprey concludes.
Atlas Board adds it believes the opportunity in Ethiopia is highly compelling and offers the Company and its supportive shareholders the best opportunity to build value both in the short and long term.