The planned sale of Savannah Cement has so far attracted 15 local and international suitors, with the company’s administrators expecting more firms to pick bid documents before the deadline on Friday this week.
Mr Peter Kahi, a partner at audit firm PKF Kenya and administrator of Savannah Cement, confirmed that 15 companies are interested but declined to reveal them.
"We should anticipate getting more bidders coming through by the time we close the bid proper on 28 February 2025," said Kahi in a telephone conversation.
"I cannot disclose those who have expressed interest for fear of reprisal from two banks," explained Kahi.
The cement maker was placed under administration by KCB Bank Kenya and Absa Bank in May 2023 over a combined debt of more than Sh10 billion. Absa had unsuccessfully placed the company under administration in November 2022 after the move was suspended by the courts.
Assets on sale include the plant, machinery, furniture, and equipment as well as commercial buildings, among others.
The previous sale was to close on December 31,2024 but was called off after bidders who had been prequalified failed to meet some of the conditions, the administrator said in earlier reports. The bidding window was extended to the end of February.
Mr Kahi is confident that the cement manufacturer will find buyers. “This is a unique investment opportunity. Demand for cement in the region has consistently outstripped supply, forcing companies to import the product," he said.
Savannah Cement’s woes, which have been attributed to mismanagement and fraudulent practices, saw its revenues decline significantly while its liabilities ballooned to unsustainable levels. The growing debt and lack of working capital severely impacted operations, leading to production stoppages.
The firm reported a net loss of Sh2.5 billion in 2022, with its debts hitting a high of Sh18 billion by the time it was placed under a year later.
Savannah's industrial property is the largest asset valued at Sh10.1 billion, followed by a 2.5-acre piece of land in Kitengela last valued at Sh750 million.
KCB Bank Kenya is owed Sh8.89 billion while Absa Kenya has a Sh5.23 billion exposure in the firm. The pair is a preferential creditor, meaning that their claims will be prioritised.
Bidders must show technical and financial capacities to upgrade and manage the firm as well as regional or international experience in cement manufacturing or similar sectors.
The Kenyan cement market in 2025 is expected to see increased production capacity due to planned clinker capacity additions by companies such as Simba Cement and East African Portland Cement, potentially lowering production costs.
However, the market is facing stagnant cement consumption and a shrinking construction sector, leading to concerns about oversupply despite the capacity increase.
The construction sector contracted for two consecutive quarters last year, a bleak performance that was last seen 22 years ago during the reign of the late president Moi.
The contraction reflects the significant budget cuts on mega infrastructure projects, particularly roads, by the Kenya Kwanza administration as well as the high cost of building materials such as cement and bitumen.
Cement consumption, critical in determining the final output in the construction sector, declined by 10 percent to stand at 2.197 million tonnes in the third quarter of 2024, from 2.44 million tonnes consumed in a similar quarter of 2023.
