Athi River Cement eyes Sh12.7 b expansion plan

Athi River Mining company, makers of Rhino Cement. The company is talking to a strategic investor to support the company’s expansion plans to the tune of Sh12.7 billion. PHOTO | FREDRICK ONYANGO | NATION MEDIA GROUP 

In Summary

• Athi River Mining is talking to a strategic investor to support its expansion plans.
• The proposed investment shall be subject to several conditions including, but not limited, to regulatory and shareholder approvals.
• The company posted a Sh469 million net loss in the first six months of 2015 compared to Sh1.1 billion net profit realised during the same quarter in 2014.

By BRIAN NGUGI
More by this Author

Cement manufacturer Athi River Mining (ARM) is talking to a strategic investor to support its expansion plans.

The firm, while remaining cagey about what the planned capital injection to the tune of Sh12.7 billion on Monday said, “discussions are still going on and further details of the investment shall be made available to the shareholders of the company and the public in due course.”

“ARM Cement Limited is currently in discussion with an international institutional investor who intends to make an investment of up to $125 million (Sh12.7 billion) equity investment in the company through convertible preference shares,” said the firm in a cautionary notice published in the dailies.

It noted that the proposed investment shall, however, be subject to several conditions including, but not limited, to regulatory and shareholder approvals and also internal nods of the investor.

SECOND BIGGEST PRODUCER

ARM Cement, which is East Africa’s second biggest producer of cement after Bamburi, posted a Sh469 million net loss in the first six months of 2015 compared to Sh1.1 billion net profit realised during the same quarter in 2014.

(READ: Athi River Mining posts Sh469m loss)

The firm blamed the poor performance on foreign exchange losses associated with borrowing for its new clinker plant, a vital raw material for cement production.

Its foreign exchange losses stood at Sh2 billion during the third quarter of the current year, up from Sh130 million incurred during a similar period in 2014.

“The sharp depreciation of both the Kenyan and Tanzanian currencies in the nine months has resulted in an unrealised exchange loss of Sh2 billion on the company’s US dollar dominated borrowings,” said the firm’s company secretary R R Vora.

ARM’s Kenya plant can produce one million tonnes while its Rwanda plant can make 100,000 tonnes.
Its Tanzania factory has an annual capacity to produce 1.5 million tonnes of cement.