ARM CEMENT FORMER CEO STOPS SH5BN SALE TO DEVKI

The sale
of Kenyan operations of ARM Cement has been stopped temporarily after the
company’s former chief executive, Pradeep Paunrana, went to court challenging
the transfer of the assets to rival firm National Cement.

Lawyers
acting for Paunrana, who is also a significant shareholder in the Nairobi
Securities Exchange-listed firm, have filed the petition before the High Court.

PricewaterhouseCoopers
(PwC) executives Muniu Thoithi and George Weru, who are the administrators of
ARM Cement, are the respondents in the court case.

“That
in the meantime as the respondents carry out their mandate under the
administration order, they shall not execute/complete sale documents and/or
transfer, sell the shares/assets of the company until hearing and determination
of the instant application,” the judge ordered.

The court
will give further directions on Thursday next week. PwC is also expected to
respond to the accusations by Paunrana’s lawyers that the Sh5 billion offered
by National Cement undervalues ARM Cement.

A
consortium led by Paunrana had made a bid of Sh6.5 billion for the Kenyan
assets of ARM, but PwC rejected the offer because it was not accompanied by
proof of funds.

“The
offer letter did not provide any concrete proof of funding and what was
provided was simply a conditional “Expression of Interest” that did
not provide comfort and deal certainty, a critical consideration for the
bidding process,” the administrators said in a letter dated May 29.

PwC also said
that Paunrana’s bid was received on May 17, more than a month after the April 5
deadline for submission of bids.

Paunrana’s
lawyers, O&M Advocates, have however argued that there is no reason why
their client’s offer should have been rejected.

National
Cement is owned by billionaire industrialist Narendra Raval through his Devki
Group of Companies.

ARM
Cement, founded in 1974 by the late family patriarch Harjivandas J Paunrana,
has been the flagship business of the Paunrana family.

The loss
of the cement company marks a low moment for the family and particularly for
Pradeep, who has been the CEO and face of the business for decades.

Besides
the Kenyan assets, PwC is also selling ARM Cement’s plants and operations in
other markets including Tanzania.

Shareholders of the cement firm are unlikely to receive any payout from the transactions whose proceeds will mainly go to settle claims by secured creditors.https://www.businessdailyafrica.com/corporate/companies/4003102-5202056-9gq47d/index.html