Financially troubled cement manufacturer ARM administrators PricewaterhouseCoopers (PwC) are set to come under scrutiny over reports that they rejected a Ksh6.5 billion bid for the company’s assets tabled by former CEO and sitting board member Pradeep Paunrana.
In a letter to creditors, PwC confirmed that they had received the bid from a consortium owned by Mr Paunrana on May 27 more than a month after the window to table bids lapsed on April 5.
“The offer letter did not provide any concrete proof of funding and what was provided was simply a conditional expression of interest that did not provide comfort and deal certainty, a critical consideration for the bidding process,” reads a letter penned by the administrators on May 29.
PwC however allowed Paunrana to table his bid despite having reached an agreement with Mr Raval.
The administrators had already had fruitful engagements with the National Cement Company Limited (NCCL) regarding the sale of ARM’s assets worth Ksh5 billion by the time Paunrana lodged his bid on May 27, exactly the same day that the administrators were slated to append their signatures on the agreement.
NCCL is owned by billionaire Narendra Raval who reached an agreement with the administrators to buy the assets on May 21 through his Devki Group of Companies.
This comes as a blow to Mr Paunrana who inherited the business from his father.
ARM was founded in 1974 by the Paunrana patriarch, the late Harjivandas J Paunrana and has been passed on to family members for four decades.
The bid to save the company was an attempt by Mr Paunrana to protect the business considered as the family’s source of pride.
{Read: Billionaire Narendra Raval buys ARM Cement’s Kenya assets for Sh5b}
ARM, formerly known as Athi River Mining sunk into the doldrums after an ill informed aggressive expansion spree presided over by Mr Paunrana.
Earlier this week, Business Today received anonymous e-mails copied to ARM creditors from different individuals questioning why the administrators had passed over the opportunity to accept the bid tabled by Mr Paunrana despite it being significantly higher.
One of the e-mails tittled Did PwC cheat ARM creditors of more than Ksh1.5 billion? crunched the numbers questioning why PwC was in a hurry to accept the bid tabled by Devki.
{See also: ARM Cement revival hinges on PwC proposal}
“You could lose 75% of all your money. The current deal offers you a supplier, a secured lender or employee, less than 25% of your money but going back to the processes and opening it up to the higher bidders could mean more money in your pocket,”
On Friday, the Business Daily reported that Mr Paunrana had redirected its reporter’s questions to PwC while the latter is yet to comment on the issue.
