Troubled firm calls investors to a meeting
By John Otini, August 26, 2022Troubled Athi River Mining Cement (ARM) which is in liquidation has called for a shareholder meeting next month.
The meeting which will be online could inform how investors in the firm will recover part of their losses.
“Notice is hereby given that the general meeting of the ARM PLC (in liquidation) will be held by electronic means on Monday, September 12,” the firm’s appointed registrar Comprite-Kenya Limited said in a public notice.
The move gives investors an opportunity to voice their concerns after the cement manufacturer went into administration in August 2018, following a default on a loan, and its Kenyan operations were sold to National Cement in October 2019. China-based Huaxin Cement acquired the firm’s Tanzanian subsidiary Maweni Limestone in May 2020.
Creditors proceeds
Creditors of the firm are said to have lost Sh11.5 billion during the distribution of proceeds after the liquidation of the listed firm, filings by its administrators PricewaterhouseCoopers (PwC) show.
The long-running problems at the cement maker ended after a bid to revive the manufacturer’s operations could not bear fruits. As a result, joint administrators picked by PwC recommended that the firm be liquidated on the understanding it may not be able to settle its creditors in full.
Unsecured creditors, like Sayani Investments, received the worst hit after only recovering 6.2 per cent of their total claims against the company, which totalled Sh9 billion.
Out of their claims totalling Sh8.03 billion, secured lenders—mostly banks like Absa Bank Kenya and UBA Bank Kenya—were paid Sh4.98 billion. Preferential creditors, who are paid first in bankruptcy cases, received the full amount of Sh326.6 million.
The mishap at the cement company serves as an example of the dangers of being at the base of the payment waterfall, where a creditor is only paid until claims from those who are farther up the hierarchy have been resolved.
The largest unsecured lenders were Stanbic Bank ($920.1 million), Aerous ($1.55 billion), and investors of ARM’s commercial notes and bonds ($1.82 billion). Former employees of the cement firm were also owed salary arrears of Sh30 million.