NAIROBI, KENYA, SEPTEMBER 27 — Troubled cement maker- Athi River Mining Limited’s shares will not be trading at the Nairobi Securities Exchange yet, latest market developments indicate.
This follows an extension of an existing suspension by the Capital Markets Authority (CMA) which has for a second time, upheld the suspension of ARM’s shares from trading on the Nairobi bourse as the cement manufacturer remains under administration.
CMA has extended the suspension for a further 21 working days after two earlier suspensions of 21 and seven days, with the first suspension coming in on August 20. The second suspension was effected on August 30.
“Notice is hereby given on the extension of suspension in trading of Athi River Mining Cement Plc shares following the placement of the company under administration pursuant to section 534(1) of the Insolvency Act, 2015,” the Nairobi Securities Exchange said in a public notice.
The extension of suspension was issued by the Capital Markets Authority pursuant to Regulation 22(2) of the Capital Markets (Securities) (Public Offers, Listings and Disclosures) Regulations, 2002.
“The extension of suspension in trading of the company’s shares is for a further twenty one (21) working days with effect from September 28, 2018. All shareholders, investors and the general public are asked to take note of the suspension,” NSE said.
The cash-strapped cement manufacturer is grappling with a Ksh14.4 billion debt. UBA Bank put the firm under administration due to a loan default on August 17.
Muniu Thoithi and George Weru of PricewaterhouseCoopers (PwC) took over the management of the company just days after embattled CEO Pradeep Paunrana and Chairman Wilfred Murungi left.
The Insolvency Act of 2015 gives companies going through financial turmoil an opportunity to put their act together under administration. This allows them to continue operating instead of the earlier practice of wounding them up.
ARM recorded a net loss of Ksh6.55 billion for the year ended December 2017, sinking deeper into losses as the company struggled with low sales.
The loss widened from Ksh2.80 billion the company posted in 2016. Its turnover (revenues from sales) dipped 32 per cent to Ksh8.7 billion from Ksh12.8 billion the previous year.
The Nairobi Securities Exchange listed firm blamed its woes to the Tanzania government’s move to ban coal imports which it says affected its operations in the neighbouring country.
It also blamed the prolonged electioneering period in Kenya which affected its business.
ARM is linked to Sanlam Kenya’s financial woes as the underwriter and financial services provider reported an after tax loss of Ksh1.5 billion in the first half of the 2018.
Sanlam announced it has commenced a strategic business recovery strategy which includes impairment of financial assets, including corporate bonds worth more than Ksh1.1 billion earlier invested in companies currently showing signs of financial strain among them Athi River Mining, Real People and Kaluworks.
ARM Cement, once Kenya’s second-largest cement maker after LafargeHolcim’s Bamburi Cement, has seen its market share plunge to just 10 per cent after the clinker plant it built in Tanzania in 2014 failed to pay up.