Devki Group yesterday took over the cash strapped Athi River Mining Plc which was put under administration in August last year by some of its creditors over $190 million (Sh19.3 billion).
Speaking during the handover ceremony, Devki Group chairman, Nerandra Raval said 1,100 employees of the embattled firm which has since been suspended from trading at the Nairobi Securities Exchange will be retained by the new operator, National Cement Company.
Raval said the decision to retain all affected staff was deliberately anchored in Devki Group’s resolve to protect their livelihoods and support job creation.
The company has continued to play a significant role in boosting the country’s manufacturing output and support affordable housing drive by reducing the cost of construction materials.
“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 PriceWaterhouseCoopers (PwC),” Raval said.
The steel billionaire acquired ARM at $50 million and plans to invest $36 million (Sh3.7 billion) to modernize the production plants it has acquired. The transaction applies to ARM Cement’s Kenyan assets only.
ARM, which was previously controlled by the wealthy Paunrana family, started crumbling over heavy debt after an investment in its Tanzanian business failed to generate a return in the face of stiff competition from Dangote Cement and Heilderberg’s Tanzania Portland Cement Company.
In October, the creditors of ARM Cement, once the country’s second-largest cement maker, approved the sale of a subsidiary or assets to reduce its debt.
The company has seen its market share plunge to just 10 per cent after the clinker plant it built in Tanzania in 2014 failed to generate income.
ARM has been unable to recover from losses which started in the first half of 2015. In December, Oman’s Raysut Cement said it planned to acquire ARM Cement as part of its expansion plans.
Part of the outstanding debt includes Sh4.6 billion convertible debt owed to the African Finance Corporation, Sh2.5 billion in overdraft facilities owed to Stanbic Bank as well as Sh824 million owed to Standard Bank Ltd.
In 2017, the firm took additional overdraft facilities from Guarantee Trust Bank and UBA Bank valued at Sh550 million and Sh340 million respectively.
The final takeover is coming 10 days after the Competition Authority of Kenya (CAK) gave a nod for the transaction.
The Authority has asked the receiving firm to retain 95 per cent or 1,054 of 1,100 ARM Cement (Under administration) employees.
Raval said the new development underscores Devki Group’s commitment to the production of quality and affordable steel and cement to spur development in the construction industry and job creation.
“Increased supply of construction materials like steel and cement in the market will significantly reduce prices and overall construction costs to make it easier for more Kenyans to own homes,” he said.
ARM operations in Kenya include clinker and cement grinding plants in Kaloleni and Athi River.
