The East Africa Portland Cement Company (EAPCC) has settled a Ksh6.8 billion loan from the Kenya Commercial Bank, according to financial disclosures for the year ended June 2022.
EAPCC also reduced its financing costs by Ksh735 million in the period under review.
To finance a balance sheet restructuring, primarily to pay debt and close a working capital gap, the cement manufacturer has been attempting to sell off some of its substantial land holdings near Athi River.
When the company announced its half-year results in February, it made clear that the Ksh6.8 billion bank loan was about to be paid off. In light of its success in paying the debts, it also negotiated the end of interest payments.
Initially, the debt took the shape of several working capital-related facilities. However, due to a covenant violation, the lender recalled the debt. As a result, the parties entered into a settlement deed in 2019 under which the facilities were combined into a single-term loan.
In order to pay off the KCB debt, EAPCC shareholders decided to sell the investment property. By June 2021, they had delivered the land to the lender, reducing the Ksh4.85 billion loan. A new land transfer to the lender has now paid off the remaining balance.
“Administration and selling expenses decreased by 54 percent (Ksh1.3 billion) resulting from a reduction in loss from disposal of land (KCB debt settlement) and reduced litigation cost amongst others underscoring the impact of cost containment measures embarked on in the year under review,” said the company in a commentary on the full year financials.
“The cost containment initiatives, reduction in finance cost (Ksh735 million) following settlement of the KCB loan…will position the business for a period of take-off as it embarks on the implementation of its five-year strategic plan.”
The business’s total liabilities increased by Ksh640 million in the period to Ksh14.27 billion notwithstanding the settlement of the KCB loan, which was attributed by the company to an increase in personnel commitments.
EAPCC is seeking to sell an additional 709 acres in Athi River to dozens of squatters who currently occupy the land in order to raise cash flow in addition to repaying the KCB loan through land transfers.
If the entire parcel is sold, the corporation might make up to Ksh5 billion. However, this amount is likely to be lower due to allowances for infrastructure like access roads. A plot measuring 40 by 80 feet will be sold for Ksh600,000.
After the corporation publicised its plan to sell up after depleting its limestone reserves, the squatters moved onto the property in 2010.
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