ARM Cement will get an additional $15 million (about Sh1.54 billion) cash injection from its key shareholders to help shore up its financial position as it eyes a strategic investor.
MD Pradeep Paunrama said part of the new money is aimed at helping ease the cement maker’s tight cash position and will mainly be channelled to its Tanzanian unit as capital expenditure.
“We are looking at injecting $15 million for the overall company but most of it is needed in Tanzania to get the unit running back on its feet,” he said on Monday.
“Now that Tanzania has started making profit again we need to rebuild Tanzania, fund the working capital…that is where the money is required.”
UK sovereign wealth fund CDC Group bought a 42% stake last year in the cement maker that saw it inject Sh14 billion.
The cash has however proved insufficient to turn around the company’s fortune and ARM Cement is now banking on the entry of a strategic investor.
Paunrana said the firm is looking to strengthen its management team ahead of the entry of the strategic investor.
“We have received queries from about 12 local and regional investors. The process is halfway through and by December (this year) we should be able to know which direction we are going,” he said.
He said its Tanzanian operation had turned around its loss making streak on the back of improved pricing and reduced production costs.
The cement maker is capitalising on Tanzania’s rising demand for clinker to supply local cement manufacturers from its Tanga plant following a state ban on the importation of clinker – a crucial raw material for manufacturing cement.