Athi River Mining to sell bonds to fund expansion, Kenya

Athi River Mining to sell bonds to fund expansion, Kenya
Published: 19 March 2010

Athi River Mining Ltd plans to sell KES1.6bn (US$20.8m) worth of bonds in April or May to help fund the building of a new cement plant and a clinker unit in Tanzania.

Half of the $100 million project will be financed with concessional loans from the Development Bank of Southern Africa, PTA Bank Ltd. and the East African Development Bank, Surendra Bhatia, deputy managing director of Athi River, said in an interview from Nairobi, the Kenyan capital, yesterday.

The planned sale of five-year bonds, which will have a coupon of 11 per cent, combined with existing cash resources will provide the remainder of the funds, Bhatia said. It will be Athi’s second bond issue, after the company sold KES800m of debt in 2005 that is repayable this year, he said.

Athi River’s expansion comes as cement demand in Tanzania is expected to grow by 9.2 per cent over the next four years, according to a December report by African Alliance, a Mauritius- based investment bank. Consumption is being driven by a “considerable infrastructure deficit and large housing shortfall,” it said.