ARM Cement of Kenya Begins Restructuring Balance Sheet

NAIROBI (Capital Markets in Africa) – ARM Cement Ltd., a Kenyan manufacturer of the building material, said Wednesday it began restructuring its balance sheet and needs to cut its debt further after its cash flow was “crippled” by the poor performance of its unit in Tanga, Tanzania.

“The Tanga plant has not performed as expected since 2015 due to issue beyond our control,” the Nairobi-based company said in a statement in the Standard newspaper. “For this three-year period, the company saw no returns from its largest investment.”

The company, struggling under the weight of ballooning debt and sagging investor confidence, has been seeking an investor since October to help stem losses that more than doubled to 6.55 billion shillings ($65 million) last year. Companies including Lafarge Holcim SA, the largest producer, Heidelberg Cement AG of Germany and Nigeria’s Dangote Cement Plc were among parties said by people familiar with the matter to be considering bids.

Performance of the Tanzanian unit was hampered by power rationing from the national grid, inadequate supply of coal from local sources and “hyper-competition” which pushed sales price for cement below the cost of production, according to the statement.

“This restructuring process is underway; in the next few weeks we will be able to share with you the way forward for the business,” it said.

Source: Bloomberg Business News