The deal will see National Cement Ltd, Devki’s subsidiary, acquire ARM and its subsidiary's assets in Kenya, the firm’s administrators Muniu Thoithi and George Weru of PricewaterhouseCoopers (PwC) announced in a statement Tuesday.
The administrators were on October 23 2018 tasked by creditors to identify a suitable strategic or financial investor to either recapitalise the debt-laden ARM through an injection of equity and/or sell all or some of its assets. The administrators also had the option of comprehensively restructuring its debt obligations.
“ARM Cement PLC (under Administration) announces that National Cement Company Limited has signed an agreement for the acquisition of all cement and non-cement assets and business of ARM Cement PLC in Kenya as a going concern for a purchase price consideration of $50 million,” the firm said in a statement.
“The transaction with National Cement only relates to the company’s and its subsidiaries’ assets and operations in Kenya.” The loss-making ARM slipped into administration on August 17, 2018 after failing to meet its debt obligations running into billions of shillings.
Suspended from trading
It was subsequently suspended from trading on the Nairobi Securities Exchange (NSE) with its share having last traded for Sh5.50 per unit, a steep climb down from highs of Sh90 in 2014. Some 25 foreign and domestic companies had expressed their interest in taking over ARM, 23 of which had signed non-disclosure agreements, PwC administrators said in February.
“The joint administrators, with assistance from the transaction advisors, commenced the transaction process and received offers from potential buyers representing a wide spectrum of investors from varied geographies,” ARM said.
“In evaluating the offers, the joint administrators were guided by their statutory objective of achieving the best possible outcome for the company’s creditors as a whole. It is on this basis that the proposed transaction is being implemented.”
The proposed acquisition of assets by National Cement is a second in a month after the firm -- which only started operations in 2008 -- in March got the nod from the Competition Authority of Kenya to acquire West Pokot-based Cemtech Limited.
National Cement trades as Simba while ARM flagship product is Rhino Cement. ARM became the second major company to benefit from the law after cash-strapped retailer Nakumatt Holdings in January 2018.
The Insolvency Act of 2015 gives companies going through financial turmoil an opportunity to put their act together, including settlement of debts. This allows them to continue to operate instead of the earlier practice of abruptly killing them as was the case with the previous Act.