Kenya: LafargeHolcim accused of conflicting priorities over EAPCC holdings

Kenya: LafargeHolcim accused of conflicting priorities over EAPCC holdings
08 July 2016

The outgoing chief executive of the East Africa Portland Cement Company (EAPCC), Kephar Tande, has told Kenya’s Standard newspaper that LafargeHolcim should either divest itself of its holdings in the firm or take it over completely.

Kephar Tande, who steps down in November, said that LafargeHolcim’s 41.7 per cent stake in EAPCC makes the multinational firm his largest shareholder. However, LafargeHolcim also holds a 58.9 per cent stake in Bamburi Cement, Kenya’s biggest producer.

Mr Tande told the Standard: “To remove those perceptions I think the ideal position is either it is fully merged or they don’t have a stake in it.

Mr Tande denied that there was any collusion between his company and Bamburi, stating that the high cost of cement was down to other factors. He said: “We don’t do price fixing. Competition among cement manufacturers is cut-throat. However, the cost of production is high.”

In a separate interview with the Standard, Bamburi’s CEO, Bruno Pescheux, said: “There is not much I can say about that because as Bamburi, I am dealing with Bamburi and I already have plenty on my plate with my job. For the sake of clarity, I am not involved at all in any matter related to EAPCC. What I know about EAPCC, I read about in the newspapers. EAPCC is a competitor like Simba Cement or Savannah Cement. It is extremely clear, and I don’t know if we call that a firewall or China wall now, but I don’t deal with any topic relating to EAPCC.”

Turning to other matters, Mr Tande confirmed that EAPCC was seeking to sell some of its landholdings in order to raise KES10bn (US$100m) to reduce leverage and acquire a new clinker mill.

The cement producer is waiting on Cabinet approval for the sale of 13,000 acres of land owned in Athi River and valued at KES10bn (US$98.8m). If the sale is approved, proceeds will be used to retire a KES3.8bn (US$37.5m) loan as well as to modernise an ageing plant requiring nearly KES45bn (US$444.8m) to be brought to a level where it can compete with rivals such as Savannah Cement. Mr Tande said, “The board is in the process of raising KES10bn to address the most urgent issues, top of which is the reduction of bank loans that are sapping cash flow.”

Albert Sigei, a Lafarge executive, joined the EAPCC in August 2015 to help the company reach a point of profitability, but despite this it experienced further losses. The EAPCC reported a net loss of KES531m (US$5.25m) for the half-year ending December 2015. Despite being tipped to replace Mr Tande, who is not seeking another term in the role of CEO, Mr Sigei quit in April 2016. Meanwhile, Mr Tande also ruled out extending his tenure at EAPCC, stating that he had not asked the board to extend his term and was not interested in doing so.

Published under Cement News