ARM Cement #ticker:ARM will be seeking to turn a corner this year after a tumultuous 2018 that saw the company placed under administration.
The Nairobi Securities Exchange-listed firm is expected to be sold to the highest bidder in an auction that is already under way.
ARM’s administrators PricewaterhouseCoopers (PwC) have received several initial bids including from Nigeria’s Dangote Cement and Oman’s Raysut –which placed a Sh10.2 billion offer to acquire the debt-laden company.
According to the transaction timetable, binding offers are expected by the end of this month. ARM’s creditors will thereafter review the terms of the best offer, negotiate with the investor and complete the transaction.
It is not clear what stake the current ARM shareholders will be left with after the buyout is completed. What impact the transaction will have on an earlier move to sell the company’s non-cement business for Sh1.6 billion to Swiss firm Omya and ARM’s former chief executive Pradeep Paunrana is also unknown. PwC declined to comment on these issues.
“Taking into account the confidentiality obligations that we have with various bidders, and the commercially sensitive nature of the bidding information we will not be in a position to provide the specific details requested,” the administrators said.
“At this stage all you should note is that the administrators are exploring a range of options with respect to ARM Cement in order to deliver a transaction that achieves the objectives of all stakeholders. We will engage relevant stakeholders in due course as the process continues.”
ARM remains suspended from trading on the Nairobi bourse where its stock last changed hands at a price of Sh5.5 or a market capitalisation of Sh5.3 billion.
Raysut’s Sh10.2 billion offer –the only bid announced publicly— is enough to fully compensate secured creditors who are owed a total of Sh7.2 billion.
Unsecured creditors, who are claiming Sh6.7 billion, risk taking a significant haircut should the company be sold at the price proposed by Raysut.
Shareholders like UK sovereign wealth fund CDC Group and Mr Paunrana, on the other hand, are staring at major losses as little cash is likely to spill over to them.
The interest in ARM comes after the administrators established that the company has a negative equity of Sh2.4 billion, meaning that current shareholders will suffer a major dilution if a takeover deal is concluded.
PwC says the top priority is to keep ARM operational for the benefit of various stakeholders including employees and lenders which it owes some Sh14 billion.
The acquisition of ARM will give the successful bidder an instant presence in the local and regional cement market, with a need to spend more than Sh2 billion to upgrade the company’s factories.
ARM’s operations in Kenya include a clinker and cement grinding plant in Kaloleni and a cement grinding plant at Athi River.
The company also manufactures, imports and sells cement in Rwanda through its wholly owned subsidiary Kigali Cement Company.
In Tanzania, ARM runs limestone, clinker and cement plants through its subsidiaries Maweni Limestone Limited and ARM Tanzania.
Raysut says the cement manufacturer will fit well into its existing trading with East African countries. The Omani firm already supplies about 300,000 tonnes of clinker to Kenya and Tanzania alone in one quarter from its home plant at Salalah.
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.