Portland Cement in need of Sh40bn to restructure operations
East African Portland Cement Company (EAPCC) is seeking Sh40 billion to turnaround its fortunes.
This comes even as the cement maker raised concern that its outdated plant could no longer compete with its rivals in the industry.
Portland Cement Chairman Bill Lay said the company is struggling to generate revenue as buyers opt for cheaper cement products from its rivals.
EAPCC requires most of the funds to overhaul its production plant.
“We have lost market share because we have been out of production, our cement costs to high compared to our competitors. Our new competitors that have come in are all more competitive than we are,” Mr Lay said.
The firm’s market share has dropped to 11 percent over the last three years.
EAPCC is 52 percent owned by the government while Larfarge holds 47 percent of the cement maker.
Board director Kung’u Gatabaki said the company is in talks with its two main shareholders to inject capital and is also courting a possible strategic investor for more increased funding.
“The existing shareholders up to now have not been able to inject sufficient funds even to address the short to medium term plans. This board is considering proposing to the shareholder a scheme to invite international financial institutions to fund operations,” Mr Gatabako said.
An audit report recently exposed Portland Cement’s financial woes with the board now challenging shareholders to pump in money to get the company back on track.
Portland Cement is also considering selling part of its land to raise funds.
The cement maker owns over 15,000 acres of land.
Mr Lay however said given the firm’s description as a state owned company may delay these plans.
“The greatest excuse in Kenya now is let’s do it after the elections. Portland is not in a position to wait for the elections to go. I don’t think there’s a reasonable reason why a publicly traded cement company should have to wait for a political election,” he stressed.
EAPCC has a Sh6 billion debt its currently servicing.
The company last week announced plans to lay off over 1,000 employees as part of its cost cutting plans.
The layoff is expected to cost Sh2 billion.
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