CHINESE FIRM BUYS ARM CEMENT’S TANZANIA ASSETS FOR SH12 BILLION

Chinese
building materials manufacturer Huaxin Cement Company has acquired ARM Cement’s
Tanzania subsidiary, Maweni Limestone Ltd., for $116 million (Sh11.95 billion).

According
to joint ARM administrators from PwC Kenya, the acquisition of the Tanzanian
maker of Rhino Cement brand will allow the Chinese company instant access to
the regional cement market.

“This
transaction will permit Huaxin immediate entry into one of the leading markets
in East Africa and is integral to Huaxin’s broader strategy to expand its
footprint across emerging markets,” the administrators said on Thursday.

Huaxin
Cement, which majors in the production and sale of cement and concretes,
originally placed a Sh11.8 billion bid for Maweni Limestone before enhancing
the offer to Sh11.95 billion.

The deal,
which is subject to regulatory approvals among other conditions effectively
means that ARM Cement administrators are now set to receive close to Sh17
billion for the sale of the company’s assets in Kenya and Tanzania.

On
Thursday, the High Court approved the sale of ARM Kenya to National Cement
Company for Sh5 billion. The transaction had been stopped by the court pending
the determination of a case filed by the Rai Group, which claimed it had
offered to buy the business for Sh6.5 billion.

The
company was asked to deposit a Sh1.3 billion guarantee by September 10 as a
condition for continued freeze on the sale to National Cement.

However,
PwC declined to accept the guarantee saying the surety failed to meet its
terms.

ARM, once
Kenya’s second-largest cement maker after Bamburi, has seen its market share
drop to less than 10% after the clinker plant it built in Tanzania in 2014
failed to make money.

The 1.2
million metric tonne annual capacity plant in the northeast Tanzanian port of
Tanga was badly hit by power rationing, insufficient coal supply and
competition from the likes of Dangote Cement.

https://www.constructionkenya.com/7277/huaxin-maweni-limestone/As a consequence, Maweni Limestone defaulted on its loans totaling Sh21.5 billion – which were advanced to the company by ARM Cement Kenya.