Athi River Mining has been sold to Devki’s National Cement Company (NCC) allowing billionaire Narendra Raval ‘Guru’ to expand his empire to the industry’s second-largest manufacturer ahead of court proceedings tomorrow.
The administrators PriceWaterhouseCoopers (PwC) have gone on to close the deal despite an appeal by former owner Pradeep Paunrana and his associate Jaswant Rai who lost a case to stop the sale. Another case filed on July 11 challenging the sale is set to be heard Wednesday.
Mr Raval said Monday 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 to the PwC,” said Mr Raval.
PwC’s Muniu Thoithi said National Cement had assumed all assets and businesses of ARM after paying Sh1 billion and guaranteed a payment of Sh4 billion in the next two months to settle administration expenses and distribute to creditors.
“Securing a suitable investor with the ability to make the requisite CapEx investments and inject the much-needed working capital to boost production to optimal and sustainable levels was a top priority for us given ARM’s dire financial situation and the poor state of the plant,” he said.
PwC also sold off Tanzanian subsidiary following the clearance by the court to sell ARM Kenya business to NCC disposing of the troubled cement maker for a cumulative Sh16.9 billion.
The PwC said a Chinese company, Huaxin Cement, bought ARM subsidiary Maweni Limestone Limited, in Tanzania for Sh11.9 billion ($116 million) immediately Justice Mary Kasango lifted the stay orders.
ARM is set to make NCC, which manufactures the Simba Cement brand, the second-biggest cement maker in Kenya.
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.
Jaswant Rai known for his sugar milling, cooking oil and soap manufacturing businesses through Menengai Oil, Western Kenya Sugar, Sukari Industries and Olepito Sugar Company has been making an expansion into cement manufacturing after he established a smaller cement plant in Awasi, Kisumu.
National Cement expansion saw it merge with Cemtech in West Pokot with significant limestone and clay deposits that are key components in its production.
Mr Raval is also erecting a second 1.8 million metric tonnes p.a. clinker line in Kajiado where construction started this year and is to be commissioned by 2020.
He is also setting up another 0.75 million metric tonnes cement plant to be built in Kilifi while the 0.88 million metric tonnes is still underway to be commissioned in mid-2020.
“These two plants will cost Sh3 billion each while the Kenyan plant of ARM Cement may increase their capacity by 0.4 million metric tonnes,” Apex Capital said in a note to investors.
According to CAK data, Bamburi Cement is the market leader in the sub-sector with a market share of 33 percent.