Kenya's Portland Cement Plans Land Sale to Settle KCB Group Loan

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(Bloomberg) -- Loss-making East African Portland Cement Co. is seeking approval from shareholders to sell land and pay off 5.4 billion shillings ($52 million) it owes KCB Group Ltd.

Kenya’s oldest cement manufacturer plans to dispose 2,000 acres of its holdings after defaulting on obligations for the past two years, according to a circular sent to shareholders ahead of Friday’s meeting to vote on the proposed sale.

“The clearance of the debt will save the company from incurring further finance costs, currently at 614 million shillings per annum,” it said.

The debt to KCB, Kenya’s biggest lender by assets, includes accrued interest, costs and charges. The state-run cement maker needs between 20 billion shillings and 28 billion shillings during the next three to five years to clear its debts, refurbish its manufacturing plant and as working capital, Chairman Kung’u Gatabaki said by phone.

East African Portland, in which the Kenyan government and state-run National Social Security Fund hold a combined 52% stake, is also seeking approval to “voluntarily surrender” 4,256 acres back to the state, according to the circular. The government will use the land valued at 11.8 billion shillings for its affordable-housing program, it said.

Lafarge SA holds a 41.7% stake through three units; Bamburi Cement Co., Associated International Cement Ltd. and Cementia Holding AG, according to Portland’s 2018 annual report.

Last month, the cement maker declared all 800 jobs redundant as part of a plan to cut costs and invited employees to apply for 600 positions under a new staff structure. The company expects full-year earnings to drop by more than 25% this year.

©2019 Bloomberg L.P.

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