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Business
The company debts with a range of creditors, including local commercial banks.

The Tanzanian unit of Kenya’s ARM Cement has been sold to China’s Huaxin Cement company, its administrator PricewaterhouseCoopers and Huaxin said yesterday, paving way for completion of one of its production plant. Huaxin would inject $116 million (Sh12.2 billion) into the unit, Maweni Limestone Ltd, to settle liabilities and another $30 million (Sh3.1 billion) to complete plant construction and upgrade, according to their joint statement. ARM Cement was put under administration in August 2018 by some of its creditors over a $190 million (Sh20.1 billion) debt and its shares were suspended from the Nairobi bourse. It had debts with a range of creditors, including local commercial banks. “Securing a suitable investor with the ability to make the requisite investments and inject much-needed capital to boost Maweni’s operations … was a top priority … given Maweni’s dire financial situation,” said Muniu Thoiti, one of the PWC administrators. In October 2018, the creditors approved a proposal by the joint administrators to identify strategic or financial investors in ARM with a view to achieving either a recapitalisation of the company through an injection of equity or a sale of all or some of its assets. ARM Cement had an installed annual production capacity at its two plants in Kenya of 1 million tonnes, while in Tanzania, ARM has a 1.6 million tonnes in annual production capacity at two plants of equal size. Another plant in Rwanda produces 100,000 tonnes a year. ARM Cement slid into losses after investing heavily in its Tanzanian business in 2014 without generating a return. Huaxin has more than 200 plants with an annual production capacity of 100 million tonnes of cement. It also produces aggregates and concrete. The company, which has revenues of $4.5 billion (Sh477 billion), also said it is about to complete greenfield cement plants in Uzbekistan and Nepal. ARM’s Kenya operations were sold to another Kenyan company, National Cement, for $50 million (Sh5.3 billion) last year. The acquisition put National Cement, maker of Simba brand and subsidiary of Devki Group, in line to become the second largest in Kenya. “This transaction is in line with National Cement’s growth strategy in Kenya to position itself as the leading cement manufacturer in the region,” said National Cement Chairman Narendra Raval. From inception in 2010, National Cement has reported strong growth and established itself as […]

(Adds details of the deal, background)

NAIROBI, May 20 (Reuters) – The Tanzanian unit of Kenya’s ARM Cement Plc has been sold to China’s Huaxin Cement company, its administrator PricewaterhouseCoopers and Huaxin said on Wednesday, paving way for completion of one of its production plant.

Huaxin would inject $116 million into the unit, Maweni Limestone Ltd, to settle liabilities, and another $30 million to complete plant construction and upgrade, according to their joint statement.

ARM Cement was put under administration in August 2018 by some of its creditors over a $190 million debt and its shares were suspended from the Nairobi bourse. It had debts with a range of creditors, including local commercial banks.

“Securing a suitable investor with the ability to make the requisite investments and inject much-needed capital to boost Maweni’s operations … was a top priority … given Maweni’s dire financial situation,” said Muniu Thoiti, one of the PWC administrators.

ARM Cement’s Kenya operations were sold to another Kenyan company, National Cement, for $50 million last year.

ARM Cement had an installed annual production capacity at its two plants in Kenya of 1 million tonnes, while in Tanzania, ARM has a 1.6 million tonnes in annual production capacity at two plants of equal size.

Another plant in Rwanda produces 100,000 tonnes a year.

ARM Cement slid into losses after investing heavily in its Tanzanian business in 2014 without generating a return.

Huaxin has more than 200 plants with an annual production capacity of 100 million tonnes of cement, it said. It also produces aggregates and concrete.

Huaxin, which has revenues of $4.5 billion, also said it is about to complete greenfield cement plant projects in Uzbekistan and Nepal. (Reporting by George Obulutsa; Editing by Rashmi Aich)

The Nairobi Securities Exchange. FILE PHOTO | NMG Dividends paid out to multinationals for their controlling stakes in Nairobi Securities Exchange-listed firms are set to drop by 21 percent this year as a few blue-chips reduced their payouts by significant amounts.

Multinational firms including Vodacom Group, Diageo Plc, WPP Plc and BAT Plc have received or are set to get a total of Sh38.4 billion based on the latest distribution announcements.

This will be Sh10.2 billion lower compared to last year’s payout of Sh48.6 billion, but a boost to the cash flow of the mainly European-based multinationals who are freezing dividends and shoring up reserves as the coronavirus pandemic threatens to tip the world into a deep recession.

The reduction could be mitigated if East African Breweries Limited (EABL) pays a final dividend for the year ending June. The brewer last week issued a profit warning, suggesting that its net earnings for the year ending June are likely to decline by 25 percent compared to the previous period, hurt by coronavirus.

Safaricom , BOC Kenya , Bamburi , BAT Kenya and Liberty Holdings were among the NSE-listed companies that suspended or reduced their payouts in their latest results, lowering cash returns for their parent firms.

Safaricom is set to pay Vodacom Group and Vodafone Plc —its top shareholders with a combined 40 percent stake — a total of Sh22.4 billion on November 1 based on its performance for the year ended March. This represents a reduction of Sh7.5 billion compared to last year when they earned a dividend of Sh29.9 billion from the telco.

Safaricom’s upcoming payout is equivalent to a distribution of Sh1.40 per share, down from last year’s Sh1.87 per share (which included a special dividend of Sh1.25).

The telco reported a net profit of Sh74.7 billion in the year ended March, up 19.5 percent from Sh62.4 billion the year before.

LafargeHolcim will not get a dividend from its 58.6 percent stake in Bamburi Cement for the year ended December 2019. The multinational received Sh1 billion from the cement manufacturer for the prior year.

Bamburi paid a dividend of Sh5.1 per share for the year ended December 2018 and suspended payouts in the subsequent period after its net earnings fell 37.2 percent to Sh359 million on a higher tax charge.

The firm’s tax bill rose 7.6 times to Sh369 million after the expiry of tax incentives for new capital investments in its regional subsidiaries.“The absence of the […]

•Delays occasioned by on-going discussions with lenders to complete the remaining portion of debt restructure transaction.

•Social distancing measures and restricted working hours due to Covid-19 Pandemic have also affected audit timelines, the firm says. East African Cables products./ East African Cables will delay in the publishing of its audited financial results for the year ended December 31, 2019, it has said.

“The delay has been occasioned by on-going discussions with the company lenders to complete the remaining portion of the debt restructure transaction,” company secretary Virginia Ndunge said in a notice.

In addition, the social distancing measures and restricted working hours enforced by the government due to Covid-19 Pandemic, have significantly affected the audit timelines, the firm says.

“The audit of the financial statements for the year ended December 31, 2019 is in progress and the board and management wish to assure the public that the audited financial statements shall be published no later than July 31, 2020,” the statement reads in part.

Accordingly, the directors of the company have applied for, and obtained an approval from the Capital Markets Authority (CMA), granting the company the extension.

This week, the cable maker got a major reprieve after SBM Bank (Kenya) rescinded its liquidation plans and instead crafted a debt settlement and restructuring agreement.

The lender had early this year filed a petition to liquidate the loss-making cable manufacturer after it defaulted on a Sh285 million loan.

“The agreement involves a restructure of the outstanding facilities by the bank under a new long-term facility and security arrangement,” Ndunge said in a public notice.

“The board and management of the company appreciate the great support they have received from all the lenders in the company’s debt restructure plan, recognizes and values this partnership,” she added.

The withdrawal of the petition is a significant step towards the company’s turnaround plan, management now says, that includes strengthening of the balance sheet, operational improvement and having the right funding structure for growth and profitability.Other lenders seeking their monies include Ecobank which recently sought to recover Sh190 million, part of a Sh350 million credit facility extended to the company between 2011 and 2013.The Nairobi Securities Exchange-listed firm jumped back to profitability last year despite a decline in turnover, posting net earnings of Sh634 million for the six months ended June 30, 2019.This was a significant shift from losses of Sh303 million recorded over the same period the previous year, as the company which has […]

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To determine the rewards potential of the Delta SkyMiles Gold Business card, we have to look at the bonus categories and calculate what an example American household might spend in those areas. Forbes uses data from various government agencies in order to determine both baseline income and spending averages across various categories. The 70th percentile of wage-earning households bring in $100,172 annually, and we base spending on that number. For a small business card, we base our estimates on a sole proprietorship or a freelancer’s expenses.

The Delta SkyMiles Gold Card earns the following: 2 SkyMiles per dollar spent on Delta Air Lines purchases

2 miles per dollar on the following business-related spending: U.S. shipping, U.S. advertising in select media, and restaurants worldwide.

1 mile per dollar […]

•SBM Bank Kenya had filed a petition to liquidate the loss-making cable manufacturer after it defaulted on a Sh285 million loan.

•The withdrawal of the petition is a significant step towards the company’s turnaround plan, management now says. East African Cables products./ East African Cables (PLC) has received a major reprieve after SBM Bank (Kenya) rescinded its liquidation plans and instead crafted a debt settlement and restructuring agreement.

The lender had early this year filed a petition to liquidate the loss-making cable manufacturer after it defaulted on a Sh285 million loan.

This was under the Insolvency Act 2015 which provides directions for resolving companies unable to pay their obligations.

On Thursday, East African Cables which is part of TransCentury Group’s holdings said it had reached a debt settlement plan-a much-needed relief for the company which has been struggling with losses and debt owed to various creditors including bondholders and banks.

“The agreement involves a restructure of the outstanding facilities by the bank under a new long-term facility and security arrangement,” EA Cables Company Secretary Virginia Ndunge said in a public notice.

“The board and management of the company appreciate the great support they have received from all the lenders in the company’s debt restructure plan, recognizes and values this partnership,” it said.

The withdrawal of the petition is a significant step towards the company’s turnaround plan, management now says, that includes strengthening of the balance sheet, operational improvement and having the right funding structure for growth and profitability.

Other lenders seeking their monies include Ecobank which recently sought to recover Sh190 million, part of a Sh350 million credit facility extended to the company between 2011 and 2013.

The Nairobi Securities Exchange-listed firm jumped back to profitability last year despite a decline in turnover, posting net earnings of Sh634 million for the six months ended June 30, 2019.

This was a significant shift from losses of Sh303 million recorded over the same period the previous year, as the company which has facilities in Kenya, Tanzania and Eastern DRC faced a tough business environment in the wake of cheap imports mainly from China.The firm also has presence in Uganda, Rwanda, Burundi, Southern Sudan and Ethiopia, through a distribution network.It specializes in manufacturing an extensive range of cables for applications in domestic and Industrial lighting, as well as transmission and distribution of electricity.The company also offers data, telecommunication and fiber optic solutions.

Troubled cement maker Athi River Mining (ARM) is seeking to dispose of its Rwanda and South African subsidiaries, bringing closer to de-listing of the Nairobi Securities Exchange (NSE) listed company.

Administrators of the cement processor last year sold its flagship Kenyan business to a family-owned conglomerate, Devki Group, for an estimated $50 million.

Sale of the Tanzanian subsidiary to a Chinese group is also underway.

The disposals are intended to pay off ARM’s $284 million mountain of debts owed to creditors in Kenya ($170 million), Tanzania ($110 million) and Rwanda ($4 million).

The Kenyan market regulator, Capital Markets Authority (CMA), on May 8 extended the trading suspension of its stock on the Nairobi NSE indefinitely, effectively paving way for its delisting once the share sale transactions are concluded.

ARM was put under administration by the United Bank of Africa (UBA) over loan default on August 17, 2018.

It has failed to recover from financial bruises afflicted by mismanagement and tough competition.

The joint administrators procured from PricewaterhouseCoopers(PwC) — George Weru and Muniu Thoithi — said ARM’s Tanzanian subsidiary (Maweni Limestone Ltd) is subject of a sale transaction to Huaxin (Hong Kong) International Holdings Ltd and Huaxin Hong Kong (Tanzania) Investments Ltd as a going concern for $116 million subject to regulatory and contractual conditions.

"There are still a few precedent conditions pending and we continue to engage with relevant stakeholders with a view to fulfilling the same and progressing completion of the transaction at the earliest opportunity," Mr Weru told The EastAfrican in an interview.

"Proceeds of the transactions will first be used to settle all of the liabilities of Maweni before the balance, if any, is repatriated to Kenya for distribution to the creditors of ARM in accordance to the provisions of the Insolvency Act of 2015," added Mr Weru.

The administrators are also seeking to resolve a dispute with minority shareholders relating to the firm’s South African subsidiary.The South African business is a dormant entity, according to the administrators.In Rwanda, the administrators are pursuing a potential sale transaction of ARM’s grinding plant — Kigali Cement plant in Nyarugenge District — that is owned by ARM’s subsidiary in Rwanda (Kigali Cement)."The proceeds from the transaction are unlikely to sufficiently cater for all the liabilities of that subsidiary and remain for distribution to ARM creditors," said Mr Weru."So, considering Kenya fetched $50 million and Tanzania $116 million there will be substantial shortfall to creditors. Payment to creditors is based […]

The East African Cables manufacturing plant in Nairobi. The company has been making losses for the past four years. FILE PHOTO | NMG The agreement involves a restructure of the outstanding facilities by the bank under a new long term facility.

EA Cables is grappling with a huge debt portfolio amounting to Ksh3.55 billion ($35.5 million), which has eroded cash flows pushing the firm into a negative working capital position of Ksh3.27 billion ($32.7 million).

According to the firm’s 2018 annual report, it owed banks a total of Ksh3.55 billion ($35.5 million) as at December 31, 2018, of which Ksh2.56 billion ($25.6 million) was borrowed from Standard Chartered Bank Kenya and $5.32 million from Standard Chartered Bank Tanzania.

East African Cables has reached an agreement with the State Bank of Mauritius (SBM) over the restructuring of Ksh285 million ($2.85 million) debt that is due and payment on demand, giving the company a lifeline in its recovery efforts.

The agreement means the lender withdraws a liquidation petition against the firm, a Nairobi Securities Exchange-listed firm that has been making losses since 2015.

“The agreement involves a restructure of the outstanding facilities by the bank under a new long term facility and security arrangement,” said company secretary Virginia Ndunge in a public notice last week.

“The withdrawal of the petition is a significant step towards the company’s turnaround plan that includes strengthening of the balance sheet, operational improvement and having the right funding structure for growth and profitability.”

Debt portfolio

In January 2020, the firm announced that the board had been in discussion with all the lenders.

EA Cables is grappling with a huge debt portfolio amounting to Ksh3.55 billion ($35.5 million), which has eroded cash flows pushing the firm into a negative working capital position of Ksh3.27 billion ($32.7 million).

According to the firm’s 2018 annual report, it owed banks a total of Ksh3.55 billion ($35.5 million) as at December 31, 2018, of which Ksh2.56 billion ($25.6 million) was borrowed from Standard Chartered Bank Kenya and $5.32 million from Standard Chartered Bank Tanzania.Other loans included Ksh161.52 million ($1.61 million) from Ecobank Kenya Ksh285.01 million ($2.85 million) from SBM and Ksh3.82 million ($38,200) from Credit Bank Kenya Ltd.According to the report, out of the Ksh3.55 billion ($35.5 million) that was due for repayment on December 31, 2018, loans amounting to Ksh1.6 billion ($16 million) relating to Standard Chartered Bank Kenya and Standard Chartered Bank Tanzania were […]

Nairobi — Equity Group has registered a decline in profit after tax by 14 percent to Sh5.3 billion in the first quarter of the year, attributable to a tenfold increase in its loan loss provision to Sh3 billion. A year earlier, its provisions on loans were Sh300 million.

In a statement, Dr. James Mwangi, Group Managing Director and CEO, said the global COVID-19 pandemic had introduced unprecedented uncertainty within the global financial systems prompting the bank to adopt a conservative approach. As such, the bank has had to fortify its balance sheet and assuring ample liquidity to support its customers.

The Group’s total assets registered a 14 percent year on year growth to Sh693.2 billion from Sh605.7 billion driven by a 17 percent growth in customer deposits to Sh499.3 billion from Sh 428.5 billion.

Net interest income grew by 11 percent on the back of a 24 percent year on year growth on loan book to Sh379.2 billion up from Sh305.5 billion, which reflected strain with the non-performing loan book growing to 10.9 percent up from 9.1 percent the previous year.

Aggressive provisions saw the cost of risk rising to 3.24 percent up from 0.37 percent.

The Group’s total income grew by 13 percent to Sh19.7 billion up from Sh17.5 billion for the same period last year. Non-funded income grew by 16 percent outpacing the 11 percent growth on net interest income thereby increasing its contribution to 42 percent of the Group’s total income.

Forex trading income grew by 34 percent to Sh1.1 billion up from Sh 815 million with 26.5 percent of the volume traded contributed by diaspora flows. Diaspora remittances commissions grew by 22 percent to Sh234 million up from Sh192 million the previous year with the volume of diaspora remittances growing by 31 percent to reach Sh40.6 billion up from Sh30.9 billion the previous year.

Merchant banking commission grew by 11 percent to Sh582 million up from Sh523 million the previous year with Merchant banking volume reaching Sh29 billion up from Sh25.6 billion.

Mwangi said the group is still registering progress in transforming itself from the place you go to something you do on devices. As such, the brick and mortar infrastructure of branches and ATMs processed only 6 percent of the Group’s banking transactions, while mobile and internet banking processed 79 percent of all transactions, with agents and merchants processing 15 percent of transactions making the Group an increasingly virtual digital financial service […]

The East African Cables manufacturing plant in Nairobi. The company has been making losses for the past four years. FILE PHOTO | NMG The agreement involves a restructure of the outstanding facilities by the bank under a new long term facility.

EA Cables is grappling with a huge debt portfolio amounting to Ksh3.55 billion ($35.5 million), which has eroded cash flows pushing the firm into a negative working capital position of Ksh3.27 billion ($32.7 million).

According to the firm’s 2018 annual report, it owed banks a total of Ksh3.55 billion ($35.5 million) as at December 31, 2018, of which Ksh2.56 billion ($25.6 million) was borrowed from Standard Chartered Bank Kenya and $5.32 million from Standard Chartered Bank Tanzania.

East African Cables has reached an agreement with the State Bank of Mauritius (SBM) over the restructuring of Ksh285 million ($2.85 million) debt that is due and payment on demand, giving the company a lifeline in its recovery efforts.

The agreement means the lender withdraws a liquidation petition against the firm, a Nairobi Securities Exchange-listed firm that has been making losses since 2015.

“The agreement involves a restructure of the outstanding facilities by the bank under a new long term facility and security arrangement,” said company secretary Virginia Ndunge in a public notice last week.

“The withdrawal of the petition is a significant step towards the company’s turnaround plan that includes strengthening of the balance sheet, operational improvement and having the right funding structure for growth and profitability.”

Debt portfolio

In January 2020, the firm announced that the board had been in discussion with all the lenders.

EA Cables is grappling with a huge debt portfolio amounting to Ksh3.55 billion ($35.5 million), which has eroded cash flows pushing the firm into a negative working capital position of Ksh3.27 billion ($32.7 million).

According to the firm’s 2018 annual report, it owed banks a total of Ksh3.55 billion ($35.5 million) as at December 31, 2018, of which Ksh2.56 billion ($25.6 million) was borrowed from Standard Chartered Bank Kenya and $5.32 million from Standard Chartered Bank Tanzania.Other loans included Ksh161.52 million ($1.61 million) from Ecobank Kenya Ksh285.01 million ($2.85 million) from SBM and Ksh3.82 million ($38,200) from Credit Bank Kenya Ltd.According to the report, out of the Ksh3.55 billion ($35.5 million) that was due for repayment on December 31, 2018, loans amounting to Ksh1.6 billion ($16 million) relating to Standard Chartered Bank Kenya and Standard Chartered Bank Tanzania were […]