Lafarge, the French multinational, is in talks to acquire East African Portland Cement Company (NSE:EAPC), a firm that is heaving under a financial rut.
The firm is now considering bailing out EAPCC, which it holds 41.7 per cent stake, by purchasing the remaining stake from the government and other shareholders.
The negotiations, at early stages, are on the table, says a person familiar with the transpiring deal.
“For the past three years, EAPCC has been seeking authorisation from the government to dispose of its properties in order to maintain liquidity. Unfortunately, politics got in the way and the requests came rather too late,” said a person with the understanding of the cement maker’s situation, but is not authorised to speak on behalf of it.
EAPCC is in dire financial distress, and will need at least Ksh15 billion lifeline to operate at the bare minimum.
Immediate capital injection would retire Ksh1.4 billion dues owed to its employees, offset Ksh4.5 billion loan and Ksh1.5 billion owed to Japanese International Corporation Agency (JICA), settle Ksh3.5 billion suppliers dues and refurbish its ageing plant.
In his latest professional opinion on EAPCC books, Auditor General Edward Ouko said the firm’s current liabilities exceeded its current assets by Ksh6 billion from Ksh4.2 billion in 2017. This questions the ability of the firm to offset its debts.
The government gave EAPCC nod to sell its 900 acres of its idle 14,000 acres of lands to offset the working capital deficit in November 2018.
Lafarge also owns 58.6 per cent at Bamburi Cement.
