ARM Cement to give up Tanzania assets

Nairobi. ARM Cement has sweetened a deal for buyers of its non-cement businesses, offering them additional assets in Tanzania worth Ksh854.6 million (Sh17 billion) for free.

The company earlier announced it had reached an agreement to sell its fertiliser and mineral production businesses in Kenya to Swiss firm Omya and Pinner Heights Limited (PHL), a company owned by its CEO Pradeed Paunrana, for Sh1.6 billion.

ARM has further disclosed in its latest annual report that the buyers could also acquire its non-cement operations in Tanzania for free in what is seen as an effort to close the deal, which was still pending as of May.

“Further, the sale agreement grants the purchasers an option to acquire ARM’s non-cement business assets in Tanzania at no further financial consideration,” the Nairobi Securities Exchange-listed firm said in the report. The company estimates the loss arising from the sweetener at Sh854.6 million.

“The assets deemed as impaired were previously used exclusively in the production process for the non-cement products, but were not part of the assets to be acquired by the prospective buyer. The assets were therefore deemed as having scrap value and the resulting impairment loss booked.”

The Paunrana family is set to invest more than Ksh650 million (Sh13 billion) to buy stakes in the units that are being sold –ARM Energy, Mavuno Fertilisers and its wholly-owned subsidiary ARM Minerals and Chemicals.

The Paunranas’ interest in the divestitures signals their confidence about the subsidiaries’ future potential as standalone businesses. Their participation may also have been necessary to give comfort to Omya.