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Rescuer Rejected $65 Million Bid for Kenyan Cement Maker ARM

Rescuer Rejected $65 Million Bid for Kenyan Cement Maker ARM

(Bloomberg) -- PwC Kenya Ltd., which is seeking buyers for debt-laden ARM Cement Ltd., rejected a $65 million offer for the company because the bid was filed late and had no proof of funding.

PwC received the offer “from a consortium associated with one of the shareholders of the company in conjunction with another party.” The shareholder submitted the bid on May 17, six weeks after an April 5 deadline, according to a letter sent to creditors and seen by Bloomberg. It sought to explain why the administrators accepted an earlier bid of $50 million.

Shareholders of the company, which has been under administration since August, include London-based CDC Group Ltd. and the cement maker’s former managing director, Pradeep Paunrana. They both didn’t immediately respond to emailed requests for comment.

“The shareholder did not submit any formal interest until very late in the transaction process when he engaged the administrators in a series of possible, albeit inconclusive, bids and transaction scenarios with a series of different potential partners,” according to PwC. The offer letter “did not provide any concrete proof of funding.”

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ARM has been weighed down by 14.4 billion shillings ($142 million) of debt. Oman-based Raysut Cement Co., looking to expand in Africa, expressed an interest in acquiring it for more than $100 million, as did Dangote Cement Plc, the continent’s biggest producer of the building material.

PwC said last week it agreed to sell ARM’s Kenyan business to National Cement Co. in a deal that retains liabilities on the struggling company’s books. The administrator will continue to engage potential investors for the remaining units in Tanzania and Rwanda, according to the letter.

“Given the quantum of ARM’s creditor claims, it is unlikely that shareholders will receive any distributions or dividends arising from proceeds of the transaction,” PwC said.

Shareholders’ approval for the transaction is not required, and creditors already agreed to a sale in a meeting on Oct. 23, the administrator said. Advisers on the transaction, which will take three to six months to conclude, were Absa Bank Ltd. and Barclays Capital, according to the letter.

To contact the reporter on this story: Bella Genga in Nairobi at bgenga2@bloomberg.net

To contact the editors responsible for this story: David Malingha at dmalingha@bloomberg.net, Helen Nyambura, Paul Richardson

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