East African Portland Cement Company closed the year with long-term loans of Sh3.6 billion compared to Sh1.8 billion reported in 2016.
Simon Peter ole Nkeri, EAPCC’s managing director, said the increased debt resulted from the conversion of an expensive overdraft held with KCB into a seven year-loan, with the benefit of a three-month moratorium on repayment.
East African Portland Cement Company (EAPCC) #ticker:PORT has negotiated a restructuring of its loan with KCB Group #ticker:KCB to ease repayment pressure as lower sales deepened the firm’s net loss for the six months to December nearly four-fold to Sh969.6 million.
The listed cement maker, which has consistently reported losses mainly attributed to mismanagement, closed the year with long-term loans of Sh3.6 billion compared to Sh1.8 billion reported in 2016.
Simon Peter ole Nkeri, EAPCC’s managing director, said the increased debt resulted from the conversion of an expensive overdraft held with KCB into a seven year-loan, with the benefit of a three-month moratorium on repayment.
The debt restructuring comes at a time when Portland Cement is trying to sell idle land to ease its cashflow crunch. The company’s half-year sales revenue dropped Sh660 million to Sh3.06 billion.
“We restructured our loan with our main banker KCB last December. An overdraft is extremely expensive, especially when you skip a payment,” Mr ole Nkeri said in an interview.
“This is a longer term loan and it will go a long way in easing pressure on the company. We got a three-month moratorium so we shall start paying it around April.”
Mr ole Nkeri said the extended electioneering period caused a slowdown in the uptake of cement as investors put on hold construction projects.
An increase in the cost of clinker — the main raw material for cement — coal and electricity also ate into the firm’s earnings.
Portland’s administration and selling expenses dropped by six per cent to Sh1bn, attributed to the exit of 155 employees through “natural attrition.”
The firm’s management is now banking on the government’s plan to build affordable housing and revamp the manufacturing sector to improve its performance in the short-term.
EAPCC is seeking government approval to sell at least half of 14,000 acres of idle land it owns, with management anticipating the firm will book between Sh10 billion and Sh40 billion from this disposal.
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