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Companies
Wednesday, July 11, 2018 9:03
By VICTOR JUMA
The International Finance Corporation (IFC) is expected to take more than $ 120 million (12 billion shillings) of ARM Cement #ticker: ARM loans as part of the Nairobi Securities Exchange-listed firm's efforts to lighten its debt.
will add to a $ 20 million loan (Sh2 billion) that will be provided by the British investment fund CDC Group, which holds a 41% stake in the company.
"We are restructuring our balance sheet to allow the company to recover" CEO Pradeep Paunrana told Business Daily in an interview
The CDC loan, whose conditions are under development, should be received within two months. The IFC loan, expected within a year, will be repaid at an interest rate of about six percent and will mature in ten years.
The IFC also proposed an investment of $ 50 million (Sh5 billion), but Mr. Paunrana We have to wait for the market value of ARM to rebound, adding that the current stock price undervalues the company in a significative way.
The stock fell sharply below Sh4, after peaking at nearly 100 shillings
report said the ARM badets were overvalued. The company's share also suffered revelations that it had failed to pay interest on a bond it had issued in 2015.
The new loans will be used to repay the current debt in the short and long term. the medium term of the cement manufacturer which is relatively expensive, with interest rate between nine and 17.5%.
ARM's creditors include Lagos-based African Finance Corporation, which owes it 4.4 billion shillings and Stanbic Bank #ticker: CFC (3.3 billion shillings).
The cement also owns bonds and commercial papers, with a total of Bonds raised to 14.4 billion shillings in December 2017.
The raising of new funds has become urgent after ARM suffered significant losses, resulting in default and breach of commitments by its lenders.
"The company has signed with Stanford Bank and Aureos which contain certain financial covenants, which are monitored against annual audited financial statements. The group does not respect all the financial clauses, but expects to receive derogations from the financiers, "says ARM in its latest annual report.
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