Pradeep Paunrana, Athi River
Mining Cement Plc ex-chief executive and major shareholder has lost the
Tanzania subsidiary and a case in Kenya seeking to stop the Kenyan operation
from being sold.
On Thursday, ARM Cement Plc concluded a deal in
Tanzania to sell Maweni Limestone Ltd to Chinese firm Huaxin Cement at a cost
of $116 million.
At the same time, the High Court in Nairobi
dismissed a case he filed stopping the sale of the Kenyan operation to National
Cement Company paving the way for the conclusion of the transaction valued at
$50 million.
On the sale of Maweni, joint administrator for ARM
Cement George Weru said in a statement: “Signing of this transaction marks a
crucial step for the delivery of our mandate as joint administrators of ARM
Cement to realise value for the creditors, ensure continuity for the business
and its suppliers and in the process safeguard jobs of its employees through a
going concern sale.”
Weru also said that the sale of the Kenyan
subsidiary is now only awaiting regulatory approvals following the High Court
ruling.
Paunrana has been waging court battles to stop the
sale of the once giant cement manufacturer with operations in Kenya, Uganda and
Rwanda.
For Paunrana, the sale of the Tanzanian subsidiary
is the final nail on the coffin of his prized family holding, considering that
Tanzania was supposed to be ARM’s launching pad in its quest to dethrone
France’s Lafarge Group from East Africa’s cement market in 2012.
This led ARM to turn to commercial banks, and
borrowed a staggering $300 million to invest in cement and clinker plants with
capacity of 1.2 mtpa.
In Kenya, the case with National Cement, a
subsidiary of Devki Group, a family-owned conglomerate with interests in
cement, steel products, roofing sheets and aviation, has also been a painful
one.
The court ruling this week by Justice Mary Kasango
sitting in Nairobi dismissed the application filed by Paunrana in July to stop
the sale of the company on the basis that it was “misconceived and without
merit.”
The development is not just a big blow to Paunrana
but also to tycoon Jaswant Rai of Rai Cement, a company that was also
interested in acquiring ARM and which provided the financial backing to stop
the sale.
The court battle pitting Paunrana and Rai against
industrialist Narendra Raval had stalled the sale of ARM Cement past the expiry
of receivership, having been placed in administration on August 2018 over debts
amounting to $190 million.
Raval is the main shareholder of Devki Group that
entered into an agreement to acquire ARM in May. With the backing of Rai,
Paunrana halted the transaction on condition that he provides a guarantee
equivalent to 20% of the Ksh6.5 billion ($61.8m) bid price.
However, the court granted the administrators the
liberty to determine whether the bank guarantee met their requirements for the
sale of the Kenyan operation.
Although Paunrana has a window to appeal, the ruling ultimately brings to a conclusion the battle for ARM Kenya that attracted interests from 25 foreign and domestic companies, 23 of which had signed non-disclosure agreements.https://www.theeastafrican.co.ke/business/Double-blow-for-cement-maker-family-holdings/2560-5290974-fbfuf7/index.html
