East African Portland Cement Company (EAPCC) has received backing from the Trade Ministry to sell idle land as part of a wider effort to pull itself out of a Sh15 billion financial hole. The company is also seeking approval to pursue other asset sales and bring in a strategic investor.
At the time, the cement maker said it was operating with negative working capital and needed fresh capital to stabilise the business. Trade Principal Secretary Betty Maina told Parliament that a Cabinet memorandum had already been prepared for submission to authorise the disposal of assets.
According to Ms Maina, the proposal was being jointly prepared by the Cabinet secretaries for the National Treasury and the Ministry of Industry, Trade and Cooperatives, with submission expected by the end of November. She said EAPCC, which has Sh100 billion in assets, did not need a government bailout for its turnaround plan.
Instead, the company was looking for approvals to raise funds through the sale of idle assets and the entry of a strategic investor. EAPCC said the Sh15 billion injection would go toward employees’ dues, repayment of expensive Kenya Commercial Bank (KCB) loans, settlement of a long-outstanding Japanese International Cooperation Agency loan, plant refurbishment and payment of suppliers.
The company’s financial position remained heavily tied to KCB, which held a legal lien over its four parcels and a debenture over all the company’s assets. EAPCC said it owed the lender Sh4.2 billion, part of a wider Sh10.8 billion owed to outsiders.
Supplier obligations stood at Sh2.6 billion, while a similar amount was owed to employees for gratuity and for compliance with a court order on contract staff dues. Managing director Simon Ole Nkeri said the company was running at below 50 percent capacity because its plant was ageing.
He said EAPCC urgently needed Sh2 billion for a major shutdown that would require the kiln to be stopped and refurbished for between one and two months. The company had also published its results on Friday after missing the capital markets regulator’s deadline, posting a Sh7.79 billion net profit compared with a Sh1.47 billion loss in the previous financial year.
