East Africa Portland Cement Company (EAPCC) #ticker:PORT, the bankrupt cement maker, paid Sh23 million to a CEO it fired last year when it was struggling to keep its operations afloat.
Former EAPCC boss Simon Peter ole Nkeri took home a total of Sh23.5 million, which included severance pay, a Sh8.5 million salary and Sh1.6 million in allowances, documents seen by the Business Daily have shown.
Mr Ole Nkeri was fired last May, three months after he was suspended by the board of the company he had served since 2015. The board then replaced him with Stephen Kyalo Nthei in an acting capacity in a bid to improve performance and increase the dwindling company’s production.
The reports further showed that the EAPCC board of directors took home a staggering Sh47 million even as the company continued to suffer cash flow problems which saw it default on a Sh263 million KCB Group #ticker:KCB loan.
It also could not procure inputs to feed its 1.3 million-tonne capacity factory. As a result, during that period, it was only producing 300,000 tonnes which saw sales of its Blue Triangle cement fall by 45 percent to register a record low of Sh2.8 billion in revenue.
EAPCC board chair Edwin Kinyua was paid Sh10.3 million in allowances for roles such as officiating the captain prize, meeting lawyers, bankers and attending the presidency’s Big Four agenda meeting.
Others who took home large sums of money included Kung’u Gatabaki (Sh4.5 million), Sarone ole Sena (Sh3.7 million), Humphrey Muhu (Sh1.5 million) and Charles Mahinda Sh1.1 million.
Despite the removal of the CEO, Portland made a pre-tax loss of Sh2.8 billion in the year ended June, according to an audit report by PricewaterhouseCoopers (PwC). This reversed a pre-tax profit of Sh6.7 billion the year before, which had been obtained from major revaluation gains.
"The group’s current liabilities exceeded its current assets by Sh10.1 billion from Sh6.1 billion in 2018," PwC said.
The cement firm’s dire financial times saw it lay off employees last year, including top managers, amid a restructuring plan that will see the loss-making firm sell 2,000 acres of prime but idle land in Mavoko, Machakos, to boost its finances. It is anticipated that when fully concluded, the sale will generate more than the Sh5.4 billion needed to clear the debt its owes the KCB Group.
The extra money will be used for operations, including meeting the redundancy cost and upgrading its ageing plant. In 2018, the cement firm sold 900 acres of land at Sh5.2 billion to Kenya Railway Corporation (KRC) for construction of an inland port currently under way.
Portland will also cede 4,256 acres to the government for free because it has failed to put the property under agricultural use in line with the allocation terms inked in 1960. The company is planning to refurbish its 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.
Portland is 25.3 percent owned by the government, LafargeHolcim (41.7 percent), National Social Security Fund (27 percent) while other shareholders at the Nairobi Securities Exchange-listed manufacturer have six percent holding.