East African Portland Cement Company has won support from the Trade Ministry for a plan to dispose of idle land as it tries to raise Sh15 billion and pull itself out of a deep financial hole.
On Tuesday, Trade Principal Secretary Betty Maina told Parliament that a Cabinet memorandum had already been prepared and would be submitted by the end of November. The proposal is meant to give the company approval to sell assets as part of its turnaround plan.
In a statement to the Senate Tourism, Trade and Industrialisation Committee, Ms Maina said the company does not need a government bailout. Instead, she said, it needs the necessary approvals to pursue funding options such as selling idle assets and bringing in a strategic investor.
The company says the money is needed to pay employees’ dues, clear expensive Kenya Commercial Bank loans, repay a long-standing Japanese International Cooperation Agency loan, refurbish the plant and settle suppliers.
According to the company, it has Sh100 billion in assets. It also reported a Sh7.79 billion net profit, reversing a Sh1.47 billion loss in the previous financial year, although the results were published on Friday after the capital markets regulator’s deadline.
Most of the Sh10.8 billion owed to outsiders is tied to KCB, including working capital and short-term borrowing. EAPCC currently owes the lender Sh4.2 billion, and KCB has a legal lien over four parcels of land as well as a debenture over all company assets.
Supplier debts stand at Sh2.6 billion. A similar amount is owed to employees, covering gratuity and compliance with a court order on contract staff dues.
Managing director Simon Ole Nkeri said the cement maker is operating at below 50 percent of capacity because its plant is old and needs major work. He said the company urgently requires Sh2 billion for a shutdown that would stop the kiln and allow refurbishment for between one and two months.
The turnaround effort comes as EAPCC looks for ways to stabilise operations without direct state support, relying instead on asset sales, investor interest and restructuring of its obligations.
Published on 2018-11-20T21:21:24.000Z.
