East African Portland Cement Company plans to retrench 1,000 out of its 1,500 workforce and sell part of its land worth Ksh8 billion to turn around the company. The firm also dismissed auditor-general’s report that the firm is insolvent.
EAPCC chairman William Lay said the country’s third largest cement maker by market share is “asset rich but cash poor”. “We don’t need a bailout by the government. Instead we are presenting a solution which requires minimum intervention that will turnaround the company and position it for growth,” Lay said in Nairobi.
The listed company plans to restructure its operations in three months, including offering the 2,000 employees an early retirement package. He said the firm has recommended a structured financing programme to address the short to long-term requirements, including growth and expansion.
“This is a three-pronged financial injection programme which will include debt restructuring and stabilising operations, inviting financial investors and extracting value from idle assets by closely working with the government,” Mr Lay said.
The board was reacting to a recent report by the Auditor General Edward Ouko who has casted doubt on the firm’s ability to stay afloat with liabilities amounting to Ksh4.9 billion, against an asset value of Ksh2.11 billion.
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Mr Lay, however, said the company has a Ksh5 billion debt, owed to KCB against an asset (land) worth Sh8 billion. He said the firm will close its plant in March 2017 for rehabilitation, with operations expected to continue from April. “We need to have our cooler fixed. The restructuring including retrenchment will be in the next 90 days,” Lay said.
The company last Friday reported a 42 per cent drop in full-year net profit from Ksh7.15 billion in 2015 to Ksh4.14 billion in the year ended June 2016, blaming high operational costs and foreign exchange losses. Revenues, however, increased from Ksh8.41 billion to Ksh8.87 billion, driven by higher cement sale.
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