Portland boss fights ouster amid fallout over Sh10bn property sale

The head of Cement maker East African Portland Cement Company (EAPCC) #ticker:PORT, Stephen Nthei, has defied a regulatory notice from the board announcing his ouster amid a directors’ fallout over the sale of land parcels worth Sh10 billion.

The State-run cement firm Wednesday issued a statement replacing Mr Nthei as the acting managing director with Daniel Kiprono, the latest of hostile exits of CEOs in the loss-making firms over the past two decades.

“The board of the company wishes to inform the shareholders that Mr Daniel Kiprono has been appointed as the acting managing director of the company with effect from February 8, 2021,” EAPCC said in the notice attributed to the board.

Board chairman Edwin Kinyua didn’t respond to phone calls and text messages inquiring about the executive change.

But Mr Nthei maintained he remained the acting CEO and would make a return upon the end of his 40-day annual leave, setting stage for a battle with the board.

His replacement by Mr Kiprono, head of internal audit at EAPCC, comes in wake of differences on the board over the sale 2,000 acres of prime but idle land in Mavoko, Machakos County.

Sources close to EAPCC’s board reckon Mr Nthei favoured the sale of the land done in partnership with KCB Group, which the cement maker owes Sh6.2 billion.

But a section of directors are fronting for a Chinese investor and a Somalia national to acquire the land for Sh8 billion, triggering the boardroom fallout.

Mr Nthei acknowledged the differences over the land sale, but declined to comment on whether the property deal was behind his ouster.

“I am waiting for my leave to end in 40 days and I will return to office. If someone tries to touch my contract there will be resistance because I have done nothing to warrant an ouster,” Mr Nthei told the Business Daily in a phone interview.

His contract, he said, ends in September 2022. A notice sent February 5 by EAPCC’s head of human resources to the cement maker’s workers indicated Mr Nthei would be on annual leave from Monday.

The boardroom fallout comes in the middle of the sale of the two land parcels to generate more than the Sh6.2 billion needed to clear the KCB loan.

The extra money will be used for operations and upgrading of the firm’s ageing plant. KCB had been mandated by shareholders at an extraordinary general meeting (EGM) on September 27, 2019 to shepherd the sale process.

EAPCC has struggled to grow sales in the face of growing competition and an ageing plant, making it difficult for it to meet its obligations, including loan repayments.

The firm has had the highest turnover of CEOs among those listed on the Nairobi bourse, with all but one of the 11 over the last 18 years leaving following boardroom intrigues.

Past chief executives include John Nyambok, Zakayo ole Mapelu, Titus Barmasai, Emmanuel Biria, Simon Ole Nkeri and Kephar Tande.

Portland will cede another 4,256 acres to the government for free because it has failed to use it for agricultural use in line with the terms of an allocation deal inked in 1960.

The firm informed shareholders that the State had agreed to evict squatters from its property under the land purchase deal.

The cement firm’s idle land spans over 12,000 acres, but thousands of squatters are currently occupying a significant part of the property.

Portland is 52 percent owned by the government, LafargeHolcim (41.7 percent), and the National Social Security Fund (27 percent). Other shareholders at the Nairobi Securities Exchange have a six percent holding.

In 2018, EAPCC sold 900 acres at Sh5.2 billion to Kenya Railway Corporation for construction of an inland port currently under way.

The company also plans to refurbish the current dilapidated plant and put up a fully integrated cement milling line at a cost of Sh28 billion. The new production line will be built in phases.