Pradeep Paunrana, Athi River Mining Cement CEO. Athi River Mining has
posted a loss following sharp depreciation of the Kenyan and Tanzania
currencies. FILE PHOTO.
Photo/FILE/NATION MEDIA GROUP
Athi River Mining has posted a loss following sharp depreciation
of the Kenyan and Tanzania currencies, pushing up the cost of dollar
denominated borrowings.
The cement maker made a loss of
Sh355 million in the first half of 2015 compared to Sh847 million in
net profit last year but its revenues increased marginally from Sh7.69
billion from Sh7.57 billion.
“The sharp depreciation of
both the Kenyan and Tanzanian currencies in the last few weeks has
resulted in an unrealised exchange loss of Sh1.4 billion from our US
dollar denominated borrowings,” management said in a statement.
Financing
costs related to the construction of a clinker plant in Tanga, Tanzania
stood at Sh627 million and contributed significantly to the loss.
The
clinker is now operating at 70 per cent capacity and is expected to
reach full capacity of 4,000 tonnes per day in the next couple of
months.
DOLLAR RBASED LOANS
“The
US dollar based loans financed much of the construction of the clinker
plant in Tanzania, whilst short term borrowings in Kenya shillings
financed working capital requirements. Now that the clinker plant is
operational, no further major investment is required and the company
looks forward to increased sales, financial consolidation and debt
reduction,” the company indicated.
In 2012, ARM
borrowed $50 million loan from Lagos based Africa Finance Corporation
(AFC) in the form of a convertible bond. AFC has the option of
converting the debt into equity any time in the six-year period of the
loan term, a possibility that could have erased the loss the cement
maker made or may make in future as a result of continued depreciation
of the shilling.
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