August 18, 2018 / 8:11 AM / 3 months ago

UPDATE 1-Kenya's ARM Cement put under administration - PWC statement

(Adds details, background)

By George Obulutsa

NAIROBI, Aug 18 (Reuters) - Kenya’s ARM Cement has been put into administration, PricewaterhouseCoopers said in a statement on Saturday, days after ARM Cement’s chief executive officer said he was relinquishing his post but staying on its board.

PWC’s Muniu Thoiti and George Weru have been appointed as joint administrators.

PWC’s statement, published in local newspapers, said the administration, under Kenya’s Insolvency Act, was effective on Aug. 17.

“With their appointment, the Administrators shall now take control of the business assets and the management of the affairs of the company without any personal liability,” PWC said.

“By virtue of the Administration, the powers of the directors of the company in terms of dealing and/or transacting with the company’s assets have ceased, unless with the express permission of the Administrators.”

ARM Cement, which was once Kenya’s second-largest cement maker behind LafargeHolcim’s Bamburi Cement, has seen its market share plunge to just 10 percent after the clinker plant it built in Tanzania in 2014 failed to generate income.

It posted a full year loss before tax of 7.52 billion shillings in 2017, from a loss of 3.98 billion shillings a year earlier.

On Thursday, Pradeep Paunrana, its chief executive officer, had said he planned to leave his post as part of a shake-up at the Kenyan cement maker, but would stay on as a board member.

The 1.2 million metric tonne annual capacity plant in the northeast Tanzanian port of Tanga was hit by electricity rationing, inadequate coal supply and increased competition from firms like Nigeria’s Dangote Cement.

ARM Cement also operates in Rwanda.

In ARM’s annual report seen by Reuters last month, Deloitte said ARM had failed to make provisions for debts worth 21.5 billion Kenyan shillings ($213 million) owed by subsidiary Maweni Limestone Limited which had not been serviced in a long time.

ARM said at the time it had not tried to conceal that information.

In 2016, ARM Cement secured a $140 million investment from CDC Group. This year the British development finance institution added a further $4 million in short-term working capital. ($1 = 100.7300 Kenyan shillings) (Reporting by George Obulutsa; Editing by Toby Chopra)

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