ARM Cement assets sold for Sh5 billion

Former Athi River Mining MD Pradeep Paunrana

NAIROBI, KENYA: ARM Cement has signed a Sh5 billion deal for the transfer of its business to the National Cement Company.

Under the Tuesday deal, National Cement will acquire all cement and non-cement assets and business of ARM Cement PLC in Kenya as a going concern (the “Transaction”) for a purchase price consideration of USD 50M (Sh5 billion).

The Transaction, which is subject to certain conditions precedent including receipt of requisite regulatory approvals, relates to the Company’s and its subsidiaries’ assets and operations in Kenya.

ARM Cement currently has operations in Kenya, Tanzania, and Rwanda. The company also has some interests, in the form of unexploited mineral deposits, in South Africa.

The principal activities of the Company and its subsidiaries are the manufacture and distribution of cement, mining, and processing of industrial minerals and chemicals, trading in other building products and the sale of fertilizers.

Because of the inability of the Company to meet its creditor obligations, ARM Cement was placed under administration on 17th August 2018 and its shares suspended from trading on the Nairobi Stock Exchange with effect from 20th August 2018.

Muniu Thoithi and George Weru of PricewaterhouseCoopers Limited were appointed as joint administrators of the Company with the objective of the administration including maintaining the Company as a going concern or achieving a better outcome for the Company’s creditors as a whole than would be the case if the Company was liquidated without first being placed under administration.

Creditors of the Company approved a proposal by the Joint Administrators on October 23 to undertake a robust, competitive and transparent transaction process aimed at identifying strategic or financial investor(s) in ARM Cement.

Either the view was to achieve a recapitalization of the Company through an injection of equity and/or a sale of all or some of the assets of the Company and/or a comprehensive restructuring of its debt obligations.

Athi River Mining factory

The Joint Administrators, with assistance from the transaction advisors, commenced the transaction process and received offers from potential buyers representing a wide spectrum of investors from varied geographies. In evaluating the offers, the Joint Administrators were guided by their statutory objective of achieving the best possible outcome for the Company’s creditors as a whole.

It is on this basis that the proposed Transaction is being implemented.

National Cement

National Cement is a manufacturer and distributor of cement in Kenya and is a subsidiary of the Devki Group with interests spanning steel products, roofing sheets, aviation, and cement.

From inception in 2010, National Cement has reported strong growth and established itself as one of the leading producers of cement in Kenya.

The company produces the “Simba Cement” brand. The Devki Group has 4,500 employees and has operations in Kenya and Uganda.

 “We are pleased to announce the signing of this transaction which marks an important moment for the delivery of our mandate as Joint Administrators of ARM Cement to realise value for the creditors,” said George Weru Joint Administrator for ARM Cement

“This is an important milestone in the administration process. We continue to pursue the transaction processes in relation to the other subsidiaries of the Company on a going concern basis so as to reach the best and most expedient outcome in the circumstances for the Company’s creditors and will communicate with relevant stakeholders as appropriate in due course,” added Muniu Thoithi

“This Transaction is in line with National Cement’s growth strategy in Kenya to position itself as the leading cement manufacturer in the region. The industry is poised for growth and we are excited about the prospects for this next chapter of our business. We will endeavor to safeguard the interests of all stakeholders including the employees, customers, and suppliers in the overall interest of Kenya,” said Narendra Raval, Chairman of National Cement.

Late last year, Oman’s Raysut Cement said it planned to acquire ARM Cement as part of its expansion plans.

A month earlier, Nigeria’s Dangote Cement was approached about a potential transaction by advisers to ARM Cement, a source with direct knowledge of the matter told Reuters at the time.