Liquidation of the troubled cement maker Athi River Mining has begun after more than two years under administration failed to revive its operations. The liquidation follows the appointment of the company’s administrators as liquidators in a newspaper notice on Monday.
“Following the successful completion of the sale of the business and assets of ARM Cement Plc and sale of its significant subsidiary, Maweni Limestone Limited, the company transitioned from administration to liquidation,” the notice posted in the daily by administrators reads.
This also means that the company will be delisted from the stock market, in another blow to the Nairobi Securities Exchange that has lost several companies to poor management and eventual delisting.
“In line with the proposals approved by the creditors of the company at the first meeting of creditors, the former joint administrator Messrs Muniu Thoithi and George Weru of PriceWaterhousecoopers became the joint administrators of the company,” said the notice.
Firm’s shares
George Weru and Muniu Thoithi in letter to the creditors dated April 19 argued that the once largest regional cement maker can’t be saved from liquidation and that there was little chance that their claims will be paid in full from the proceeds of the ongoing disposal of the firm’s shares to investors.
“The liquidators continued to pursue an orderly winddown of the assets of the company including pursuing realisations and making distributions to the creditors,” the liquidators said. 
The cement maker was put under administration by the United Bank of Africa over a loan default on August 17, 2018.
ARM has failed to recover from financial scars afflicted by the mismanagement of its former directors and the assets and businesses it has put on sale are not enough to pay off close to $284 million (Sh32.07 billion) debt.
In the last quarter of 2019, the administrators completed the sale of all cement and non-cement assets and the business of ARM Cement Plc in Kenya to National Cement Company Ltd, which is owned by the Devki group of companies at $50 million (Sh5.64 billion).
However, $4.3 million of the proceeds of the sale have been locked up by the Kenya Revenue Authority in respect of contested tax claims and are not available for distribution to secured creditors.
In Tanzania, ARM completed the sale of all the shares it held in Maweni Limestone Ltd, its main subsidiary, to Huaxin Cement Co. Ltd through its subsidiaries Huaxin (Hong Kong) International Holdings Ltd and Huaxin (Tanzania) Investment Ltd for a capital injection $116 million.
The transaction was completed in May 2020, but the Tanzania Revenue Authority imposed a $22 million capital gains tax (CGT) on the profit of the sale, which the joint administrators have contested.
Purchase the shares
“The administrators are currently pursuing resolution of this tax claim in order to unlock a surplus to be transferred to ARM for further distribution to ARM’s creditors,” according to the administrators. The administrators have also received offers to purchase the shares and the assets of ARM (Tanzania) Ltd and discussions are ongoing with the most responsive bidder with a view to agreeing and concluding the transaction.
Like the Maweni transaction, any surplus from this transaction after the settlement of all the creditors of ARM Tanzania, will be transferred to ARM for the benefit of its creditors