Pradeep Paunrana, the billionaire steward of ARM Cement which was put under administration earlier this year has been edged out of the company by Raysut Cement Company through a deal worth 10 billion shillings.
The Oman cement maker’s decision to acquire the company comes timely when ARM’s path to liquidation was imminent. Raysut in a statement said that the acquisition is in a bid to expand its operation into the East African Market.
“The acquisition will complement Raysut’s revised strategy to manufacture clinker in proximity to the markets it supplies to in East Africa,” Raysut said in the statement.
Once the regulatory approval is finalized, it will see the end of Mr. Paunrana’s control of a company founded by his father. ARM went under administration for failing to settle its financial obligations amounting to more than 14 billion shillings. It was also projected that 9.8 billion shillings of the obligations would not be met in the current financial year.
Of the 14 billion shillings total debt, the African Finance Corporation holds a claim of 4.6 billion-shilling convertible debt, whereas 2.5 billion shillings represent an overdraft from Stanbic Bank and 824 million shillings is a loan from Standard Bank Ltd.
Deloitte, an audit firm said in its report that the group incurred a net loss totaling 6.5 billion shillings while the company registered a net loss of 4.2 billion shillings for the year ended December 31, 2017.
“During the same period, the group’s current liabilities exceeded its current assets by 13 billion shillings and accumulated losses had equaled 2.9 billion shillings. The company’s subsidiary, Maweni Limestone Ltd has an outstanding debt of 21 billion shillings and no efforts of its clearance have been made,” said Deloitte.
The company’s acquisition will see Raysut absorb the debt, a move which will attenuate stakes held by major shareholders stake including Mr. Paunrana’s claim.
Currently, Mr. Paunrana who is the managing director of ARM holds 9 percent direct shareholding that amounts to 497 million shillings. Amanat Investments Ltd also holds shares worth 137 million valued at 763 million shillings going by the firm’s last listed share price.
Raysut Cement is part of the Sultanate of Oman that runs operations across the United Arab Emirates.