AFRICA – Athi River Mining (ARM) a cement mining and manufacturing company, is set to dispose its subsidiaries in Rwanda and South Africa, a move that brings it closer to delisting from the NSE.
According to the company, they intend to use the income from disposals to pay off its US$284 million debt owed to creditors in Kenya (US$170 million), Tanzania (US$110 million), and Rwanda (US$4 million).
In Rwanda, the company is looking to sell its grinding plant — Kigali Cement plant in Nyarugenge District.
ARM Cement went under administration in August 2018 after it failed to meet its financial obligations. The company was suspended from trading at the Nairobi Securities Exchange after it went into receivership.
On 8th May this year, the Capital Markets Authority (CMA) extended the trading suspension of its stock on the NSE indefinitely.
Part of ARM’s downfall was a substantial investment in Tanzania, which did not yield return. ARM had installed two plants with an annual production capacity of 1.6 million tonnes in the country. This was besides installing two plants with a yearly production capacity of 1 million tonnes in Kenya and another plant with a production capacity of 100,000 tonnes annually.
The sale of the subsidiaries could now mean that the firm will permanently delist from NSE. ARM Cement’s Kenya operations were sold to another Kenyan company, National Cement, for US$50 million last year.
ARM was put under administration by the United Bank of Africa (UBA) over loan default on August 17, 2018. It has failed to recover from financial bruises afflicted by mismanagement and tough competition.
The joint administrators procured from PricewaterhouseCoopers(PwC) — George Weru and Muniu Thoithi — said ARM’s Tanzanian subsidiary (Maweni Limestone Ltd) is subject of a sale transaction to Huaxin (Hong Kong) International Holdings Ltd and Huaxin Hong Kong (Tanzania) Investments Ltd as a going concern for US$116 million subject to regulatory and contractual conditions.
“There are still a few precedent conditions pending and we continue to engage with relevant stakeholders with a view to fulfilling the same and progressing completion of the transaction at the earliest opportunity,” Mr Weru told The EastAfrican in an interview.
“Proceeds of the transactions will first be used to settle all of the liabilities of Maweni before the balance, if any, is repatriated to Kenya for distribution to the creditors of ARM in accordance to the provisions of the Insolvency Act of 2015,” added Mr Weru.
The administrators are also seeking to resolve a dispute with minority shareholders relating to the firm’s South African subsidiary. The South African business is a dormant entity, according to the administrators.
In Rwanda, the administrators are pursuing a potential sale transaction of ARM’s grinding plant — Kigali Cement plant in Nyarugenge District — that is owned by ARM’s subsidiary in Rwanda (Kigali Cement).
“The proceeds from the transaction are unlikely to sufficiently cater for all the liabilities of that subsidiary and remain for distribution to ARM creditors,” said Mr Weru.
“So, considering Kenya fetched US$50 million and Tanzania US$116 million there will be substantial shortfall to creditors. Payment to creditors is based on recoveries as per the Insolvency Act.”
ARM stock was suspended from trading on August 20 2018 after its market price had fallen to a record low of Ksh5 (US$0.05) per share compared to Ksh90 (US$0.9) per share in 2014.
Its losses had jumped to Ksh6.5 billion (US$65million) in 2017, with a negative working capital of Ksh13 billion (US$130 million).