East Africa Portland Cement Co (EAPC) is finalising an agreement with the Kenyan government to commence repayment of a KES1.9bn (US$21.9m) loan originally sourced from the Overseas Economic Co-operation Fund of Japan (JICA) and later taken over by the state.
According to EAPC’s newly-published annual report, the cement manufacturer is at the final stage of signing a subsidiary loan agreement with the government to clear the arrears, which include both accrued principal and interest.
EAPC secured a KES6.5bn (JPY7.67bn) loan from JICA in 1990, backed by a government guarantee, to fund plant upgrades, including the transition from wet to dry clinkering. However, due to financial constraints, the company defaulted, leading to a recall from JICA and subsequent government takeover under the loan guarantee terms.
The outstanding loan remains EAPC’s sole borrowing liability, but the company continues to face financial difficulties, with a negative working capital of KES6bn. In response, the company has explored land-debt swaps and the sale of non-strategic land assets, aiming to secure KES10bn in working capital.
“We have made substantial strides in reducing legacy debt through carefully planned asset sales. This ongoing strategy has already provided meaningful improvements to our balance sheet, with further debt reduction anticipated through ongoing negotiations with government stakeholders,” the company stated.
EAPC’s total current liabilities stood at KES12.8bn as of June 2024, against KES6.7bn in current assets. The manufacturer is banking on land sales in Athi River, including plots currently occupied by squatters, to generate fresh capital.
