A worker at an ARM Cement plant. FILE PHOTO | NMG
Summary
- 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
Loss-making ARM Cement has been placed under
administration in a move aimed at giving the debt-laden firm a lifeline
to recover by keeping away creditors from attaching its property.
Muniu
Thoiti and George Weru of PricewaterhouseCoopers (PwC) took over the
management of the cement maker on Friday, audit firm said in a paid up
statement in the dailies on Saturday, days after embattled chief
executive Pradeep Paunrana vacated executive roles.
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.
ARM, which is publicly traded on the Nairobi Securities Exchange,
becomes the second major company to benefit from the law after cash-strapped retailer Nakumatt Holdings in January.
“The
primary objective of administration is to enable an administrator, a
licensed insolvency practitioner, to explore the possibility of rescuing
the company either as a going concern or for achieving a better outcome
for creditors than would likely be the case if the company were
liquidated,” PwC said in the statement.
Joint administrators
“The
joint administrators are currently engaging all key stakeholders of the
company to elicit their cooperation as they seek to achieve the best
possible outcome to the current situation of the company.”
Mr
Thoiti and Mr Weru are now in charge of the ARM’s operations and
assets, and have requested creditors to file claims by September 7.
The
Capital Markets Authority is expected to suspend ARM Cement’s shares
from trading when market resumes after weekend on Monday.
The
tale-tell signs that all was not well at the company have been there in
recent years, with shares falling from highs of Sh90 a piece in 2014 to
Sh5.55 last Friday.
The cement
maker’s net losses in the year ended last December widened 2.3 times to
Sh6.5 billion as short-term liabilities exceeded current assets by
Sh13.4 billion.
The Paunrana family,
through Amanat Investments, control 14.3 per cent shareholding, while
Pradeep owns a further 9.3 per cent stake in the company directly.
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