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| The State wants to sell the defunct Webuye Pan Paper mills, which is grappling under the heavy yoke of debt. [PHOTO: FILE/STANDARD] |
Nairobi; Kenya: Raiply Ltd is among key contenders for the purchase of the troubled Webuye-based Panpaper Mills that is currently under receivership.
Industrialisation Cabinet Secretary Adan Mohamed yesterday said the firm, which has close links with West Kenya Sugar Miller, is among bidders who have expressed interest in the take-over of the paper manufacturer that closed shop in 2009.
Mr Mohamed, however, explained that talks over the planned sale are yet to be concluded.
“There is no sale that has happened. The business continues to be under receivership,” Mohamed told The Standard in a telephone interview adding that, “Raiply is one of the people who are interested but negotiations are still going on and that is the position.” He said the business is being sold 100 per cent.
Its revival
Raiply is a multi-billion shilling business empire involved in the production of wood products such as blockboards, plywood and propylene bags. The company is said to have started operations in the 1970s under the leadership of Tarlochan Singh Rai and his four sons. Kenya has been a net importer of paper (95 per cent), the biggest input for printed books since the collapse of the Paper miller, sending the economy of Webuya tumbling.
Panpaper requires an injection of capital to the region of Sh3 billion or an estimated expenditure $80 million (Sh7.12 billion) to revive.
West Kenya management confirmed that indeed they are aware of the negotiations but declined to comment further. President Uhuru Kenyatta while on a visit to Bungoma County mid this year, said Panpaper is one of the priorities for the National government promising to finalise details of its revival before the end of 2014.
Huge debt
In April this year, Mohamed told the parliamentary committee on Finance, Planning and Trade that six investors, mostly from Congo and Egypt, had expressed interest in acquiring the Panpaper, but only two submitted bids. He said talks with the creditors have held back the sale process. The factory’s long-term lenders hold securities on the factory and its assets, including land and the plant, a liability estimated at Sh6 billion.
Some of the creditors of the factory include the International Finance Corporation, which is owed Sh2.5 billion, PTA Bank (Sh682 million), Deutsche Bank (Sh1.8 billion), and the East Africa Development Bank (Sh317 million).
The government owned a 25 per cent shareholding in the firm with an Indian conglomerate Orient Paper Ltd controlling 34 per cent. The rest of the shares are held by East African Development Bank (EADB), Industrial and Commercial Development Corporation (ICDC), Development Bank of Kenya and Barclays Bank Trust Investment Services.
