The administrators of troubled Savannah Cement are confident they will get a suitable buyer for the firm’s multibillion-shilling assets, including plant and land after they extended the bidding window to the end of February.
Local and international firms have been given more time to bid for the assets after some of them complained they were not given adequate time to prepare and submit their offers.
Savannah’s administrator Peter Kahi, a partner at PKF Kenya, is selling all assets of the beleaguered company to compensate creditors, largely KCB Bank Kenya and Absa Bank Kenya.
Assets on sale include the plant, machinery, furniture and equipment as well as commercial buildings, amongst others.
The previous sale process was to close December 31 but was called off after bidders who had been prequalified failed to meet some of the conditions set, the administrator said.
“We will get a suitable buyer because the interest is quite there. We had so many bidders,” Mr Kahi said on telephone. “But some of them were locked out because they said they saw the advert quite late. So we have opened it up for everybody this time round and everybody has sufficient time.”
The cancelled process was divided into two phases. The first stage entailed pre-qualification of prospective firms that can buy out the assets of the company, while the second phase of the sale considered requests that were submitted by pre-qualified buyers.
The cement manufacturer was placed under administration by KCB and Absa in May 2023 KCB 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.
A statement of affairs of the company shows that it owes creditors Sh18 billion which is higher than its assets that were last valued at Sh10.9 billion in October 2022.
Savannah Cement's industrial property is the largest asset valued at Sh10.1 billion, followed by a 2.5-acre piece in Kitengela last valued at Sh750 million.
KCB Bank Kenya is owed Sh8.89 billion while Absa Bank Kenya has a Sh5.23 billion exposure in the cement manufacturing firm.
The two lenders are preferential creditors, meaning that their claims will be given priority. Bidders are required to demonstrate technical and financial capacities to upgrade and manage Savannah Cement. They should also provide an indication on regional or international experience they have in cement manufacturing or similar sectors.
Savannah is the second cement firm to face liquidation after ARM Cement suffered a similar fate in 2020 when Narendra Raval-owned National Cement acquired the latter’s factory, land and licences for about Sh5 billion.
Savannah last posted a net profit in the year ended December 2017 at Sh412.39 million before sinking into a Sh78.89 million net loss the following year. The loss widened, hitting Sh1.07 billion in 2020 and bulging further to Sh2.5 billion in 2022, when it sank into administration with accumulated losses at Sh7.86 billion.
The financials presented to creditors show that Savannah was tapping short-term loans at an alarming rate, more than quadrupling the figure from Sh1.83 billion in 2018 to Sh7.87 billion the following year before crossing Sh10 billion mark in 2021. As at May 2023, the figure stood at Sh13.48 billion.
