KENYA – Devki Group took over the cash strapped Athi River Mining Plc which was put under administration in August last year by some of its creditors over US$190 million (Sh19.3 billion).
Athi River Mining has been sold to Devki’s National Cement Company (NCC) allowing steel magnate Narendra Raval ‘Guru’ to expand his empire to the industry’s second-largest manufacturer. This brings the end of 45-year leadership by the Paunrana family.
Mr Paunrana has lost his families empire, which was once the second-biggest cement maker in Kenya behind Bamburi Cement and where he at one time held a family stake valued at Sh10 billion.
The acquisition will propel Mr Raval to be a top cement producer in the region when the production capacities of National Cement, owned by his Devki Group, and ARM are combined.
Mr Raval said the NCC had obtained approval of the Competition Authority of Kenya (CAK) on condition the company retains 95 per cent of the firm’s 1,100 employees but decided to keep all the workers.
“We are happy to inform you today that we have been able to complete the ARM acquisition and cleared all the transaction cost amounting to Sh5 billion (US$50m) to the PwC,” said Mr Raval.
Speaking during the handover ceremony, Mr. Raval said 1,100 employees of the embattled firm which has since been suspended from trading at the Nairobi Securities Exchange will be retained by the new operator, National Cement Company.
Raval said the decision to retain all affected staff was deliberately anchored in Devki Group’s resolve to protect their livelihoods and support job creation.
ARM has been unable to recover from losses which started in the first half of 2015. In December, Oman’s Raysut Cement said it planned to acquire ARM Cement as part of its expansion plans.
Part of the outstanding debt includes Sh4.6 billion (US$46m) convertible debt owed to the African Finance Corporation, Sh2.5 billion (US$25m) in overdraft facilities owed to Stanbic Bank as well as Sh824 million (US$8.2m) owed to Standard Bank Ltd.
In 2017, the firm took additional overdraft facilities from Guarantee Trust Bank and UBA Bank valued at Sh550 million (US$5.5m) and Sh340 million (US$3.4m) respectively.
ARM has been in deep problems and has for some years been navigating financial and management turmoil, which at some point made the future of the company uncertain.
The company has continued to play a significant role in boosting the country’s manufacturing output and support affordable housing drive by reducing the cost of construction materials.