China’s Huaxin Cement has bought the Tanzanian unit of Athi River Cement (ARM) Cement, Maweni Limestone Limited, according to its administrator PricewaterhouseCoopers.
The firm is expected to invest US$116m into Maweni Limestone Ltd to settle liabilities and another US$30m to complete a plant construction and upgrade.
“Securing a suitable investor with the ability to make the requisite investments and inject much-needed capital to boost Maweni’s operations […] was a top priority […] given Maweni’s dire financial situation,” said Muniu Thoiti, one of the PWC administrators.
According to global Cement, Huaxin Cement reported a 36 percent year-on-year drop in sales revenue to US$542m in the first quarter of 2020, related to the coronavirus outbreak.
“If the company can’t absorb this through the rest of the year then it might have a problem.”
Rwanda & South African Subsidiaries
The firm’s joint administrators from PricewaterhouseCoopers(PwC) — George Weru and Muniu Thoithi — according to The East African, said ARM’s Tanzanian subsidiary (Maweni Limestone Ltd) is subject of a sale transaction to Huaxin (Hong Kong) International Holdings Ltd and Huaxin Hong Kong (Tanzania) Investments Ltd as a going concern for $116 million subject to regulatory and contractual conditions.
Proceeds of the transactions will first be used to settle all of the liabilities of Maweni before the balance, if any, is repatriated to Kenya for distribution to the creditors of ARM.
The administrators are pursuing a potential sale transaction of ARM’s grinding plant — Kigali Cement plant in Nyarugenge District.
ARM Cement was put under administration in 2018 by some of its creditors over a US$190m debt and its shares were suspended from the Nairobi bourse.
ARM’s Kenya operations were sold to National Cement, for $50 million (KSh5.3 billion)in 2019.