ARM Cement Ltd has formally commenced plans to fully transfer its shares to three subsidiaries in a restructuring programme aimed at turning around the financial fortunes of the loss-making cement manufacturer.
In a notice in today’s newspapers, the company announced that its shares would be transferred to ARM Minerals and Chemicals, ARM Energy and Mavuno Fertilizer.
The move follows the sale of the three fertilizer and minerals units to Swiss industrial firm Omya and Pinner Heights of Mauritius early this month in a transaction whose value was put at least Ksh5.4 billion.
“ARM Cement has on September 5, 2017 entered into agreement with Omya (Schweiz) AG of Switzerland and Pinner Heights of Mauritius for the sale of 100 per cent of the shares in Mavuno Fertilisers (a wholly-owned subsidiary of ARM) and its subsidiary, ARM Minerals and Chemicals and ARM Energy, to Omya and Pinner Heights,” said the company in a statement.
“Prior to the completion of this transaction, ARM will transfer its minerals and fertilisers business to Mavuno Fertilisers, its non-cement-related mining business to ARM Minerals and Chemicals, and it silicates business to ARM Energy.”
The company said the move was aimed at ensuring it remains focused on the cement business, and to raise cash and release a significant amount of working capital locked in Mavuno Fertilizers.
News of the deal have seen the company’s share price endure mixed fortunes at the Nairobi Securities Exchange.
The restructuring had commenced on January 1, 2010, when the group resolved to split of the company into two distinct companies, namely ARM Cement Limited dealing in cement and lime
business and ARM Minerals & Chemicals Limited, dealing in minerals, chemicals and fertilizer business, while still continuing to serve as the holding company.
However, the decision was subsequently reversed and with effect from April 1, 2010 and all operations reverted back to Athi River Mining Ltd, ARM Cement Ltd’s precursor, and the two companies were left to be dormant.
The company also holds equity stakes in ARM Zambia Ltd and Sukam Development Company Ltd. It also owns ARM Africa Cement (Mau) Ltd and ARM Rhino Cement Ltd, Mafeking Cement (Pty) Ltd of South Africa, ARM Rwanda Ltd, ARM Africa Cement (Mauritius) Ltd and ARM Rhino Cement Ltd (Mauritius).
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As at March this year, all the subsidiaries had not yet commenced operations and were consolidated in the company’s annual financial results in view of the insignificance of the amounts they had generated.
The ones that are operational are ARM (Tanzania) Ltd, ARMSA (Pty) Ltd of South Africa, Mavuno Fertiliser Ltd (Kenya), Maweni Limestone Ltd (Tanzania) and Kigali Cement Company Ltd (Rwanda).
Mavuno Fertiliser plant, valued at Ksh7.25 million was acquired in 2005, but the firm began operations four years ago.
In May last year, ARM finalised a deal to sale 353,665, 200 ordinary shares at Ksh40 per share to CDC Africa Cement Limited, a wholly owned subsidiary of UK government-owned CDC Group Plc , raking in Ksh145 billion (US$140 million). The share price was equivalent to approximately 41.66% of the issued share capital of the company.
At least Ksh11.4 billion was utilised to retire the company’s existing debt, and the balance utilised for capital expenditure and funding existing and new cement businesses.
In addition to the equity sale, the company agreed to pay an undisclosed annual interest on the preference shares which were to be converted to equity in 2023. This is meant to strengthen the financial position of the company as it executes its regional growth plans.
The company had previously authorised the issuance of 21,000,000 ordinary shares to the
Company Employee Share Option Scheme (ESOC), representing represent 40.65 % of its issued share
capital.
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