Assets of debt-ridden Savannah Cement including its factory and land holdings are set to be sold to help compensate creditors, marking a liquidation of the firm which went into administration last year.
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.
The assets have a forced sale value of Sh7.6 billion, indicating that creditors will suffer substantial losses led by those with unsecured claims.
Savannah Cement's industrial property is the largest asset valued at Sh10.1 billion, followed by a 2.5-acre piece in Kitengela worth a market value of Sh750 million.
PKF Kenya partner Peter Kahi, who is Savannah’s administrator, said the process of selling the assets will start on August 26 and end by September 6.
"We are selling all the assets of Savannah Cement. This includes land, the plant itself, machinery, furniture and equipment as well as commercial buildings they own among other assets. We will see how much we can raise from this sale. I can't put a figure to it now," Mr Kahi said.
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 are preferential creditors, meaning that their claims will be given priority as others wait to see if there will be any surplus left to settle their debt. The sale process, Mr Kahi said, will happen in two parts.
The first stage entails pre-qualification of prospective firms that can buy out the assets of the company while the second phase of the sale entails considering requests that will be submitted by pre-qualified buyers.
He says that companies interested in buying the assets of the troubled cement firm must 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 industry or similar sectors.
"They should also demonstrate financial capacity to undertake the transaction and also provide the audited financial statement of the last three years," Mr Kahi said.
Savannah, the second cement firm to face liquidation after ARM Cement suffered a similar fate, posted a Sh412.39 million net profit in the year ended December 2017 before sinking into a Sh78.89 million net loss the following year.
The loss has been widening, hitting Sh1.07 billion in 2020 and bulging further to Sh2.5 billion in 2022, when it sunk 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.
