Loss-making ARM Cement #ticker:ARM has been placed under administration in a move aimed at giving the debt-laden firm a lifeline to recover by keeping away creditors from attaching its property.
Muniu Thoiti and George Weru of PricewaterhouseCoopers (PwC) took over the management of the cement maker on Friday, audit firm said in a paid up statement in the dailies on Saturday, days after embattled chief executive Pradeep Paunrana vacated executive roles.
The Insolvency Act of 2015 gives companies going through financial turmoil an opportunity to put their act together, including settlement of debts.
This allows them to continue to operate instead of the earlier practice of abruptly killing them as was the case with the previous Act.
ARM, which is publicly traded on the Nairobi Securities Exchange, #ticker:NSE becomes the second major company to benefit from the law after cash-strapped retailer Nakumatt Holdings in January.
“The primary objective of administration is to enable an administrator, a licensed insolvency practitioner, to explore the possibility of rescuing the company either as a going concern or for achieving a better outcome for creditors than would likely be the case if the company were liquidated,” PwC said in the statement.
“The joint administrators are currently engaging all key stakeholders of the company to elicit their cooperation as they seek to achieve the best possible outcome to the current situation of the company.”
Mr Thoiti and Mr Weru are now in charge of the ARM’s operations and assets, and have requested creditors to file claims by September 7.
The Capital Markets Authority is expected to suspend ARM Cement’s shares from trading when market resumes after weekend on Monday.
The tale-tell signs that all was not well at the company have been there in recent years, with shares falling from highs of Sh90 a piece in 2014 to Sh5.55 last Friday.
The cement maker’s net losses in the year ended last December widened 2.3 times to Sh6.5 billion as short-term liabilities exceeded current assets by Sh13.4 billion.
The Paunrana family, through Amanat Investments, control 14.3 per cent shareholding, while Pradeep owns a further 9.3 per cent stake in the company directly.