DOUBLE BLOW FOR CEMENT MAKER’S FAMILY HOLDINGS
Pradeep Paunrana, Athi River Mining Cement Plc ex-chief executive and major shareholder has lost the Tanzania subsidiary and a case in Kenya seeking to stop the Kenyan operation from being sold.
On Thursday, ARM Cement Plc concluded a deal in Tanzania to sell Maweni Limestone Ltd to Chinese firm Huaxin Cement at a cost of $116 million.
At the same time, the High Court in Nairobi dismissed a case he filed stopping the sale of the Kenyan operation to National Cement Company paving the way for the conclusion of the transaction valued at $50 million.
On the sale of Maweni, joint administrator for ARM Cement George Weru said in a statement: “Signing of this transaction marks a crucial step for the delivery of our mandate as joint administrators of ARM Cement to realise value for the creditors, ensure continuity for the business and its suppliers and in the process safeguard jobs of its employees through a going concern sale.”
Weru also said that the sale of the Kenyan subsidiary is now only awaiting regulatory approvals following the High Court ruling.
Paunrana has been waging court battles to stop the sale of the once giant cement manufacturer with operations in Kenya, Uganda and Rwanda.
For Paunrana, the sale of the Tanzanian subsidiary is the final nail on the coffin of his prized family holding, considering that Tanzania was supposed to be ARM’s launching pad in its quest to dethrone France’s Lafarge Group from East Africa’s cement market in 2012.
This led ARM to turn to commercial banks, and borrowed a staggering $300 million to invest in cement and clinker plants with capacity of 1.2 mtpa.
In Kenya, the case with National Cement, a subsidiary of Devki Group, a family-owned conglomerate with interests in cement, steel products, roofing sheets and aviation, has also been a painful one.
The court ruling this week by Justice Mary Kasango sitting in Nairobi dismissed the application filed by Paunrana in July to stop the sale of the company on the basis that it was “misconceived and without merit.”
The development is not just a big blow to Paunrana but also to tycoon Jaswant Rai of Rai Cement, a company that was also interested in acquiring ARM and which provided the financial backing to stop the sale.
The court battle pitting Paunrana and Rai against industrialist Narendra Raval had stalled the sale of ARM Cement past the expiry of receivership, having been placed in administration on August 2018 over debts amounting to $190 million.
Raval is the main shareholder of Devki Group that entered into an agreement to acquire ARM in May. With the backing of Rai, Paunrana halted the transaction on condition that he provides a guarantee equivalent to 20% of the Ksh6.5 billion ($61.8m) bid price.
However, the court granted the administrators the liberty to determine whether the bank guarantee met their requirements for the sale of the Kenyan operation.
Although Paunrana has a window to appeal, the ruling ultimately brings to a conclusion the battle for ARM Kenya that attracted interests from 25 foreign and domestic companies, 23 of which had signed non-disclosure agreements.https://www.theeastafrican.co.ke/business/Double-blow-for-cement-maker-family-holdings/2560-5290974-fbfuf7/index.html
