Tycoon Jaswant Rai has lost the billionaire court fight to buy troubled cement maker Athi River Mining (ARM) for Sh6.5 billion to rival businessman Narendra Raval ‘Guru’ of National Cement.
The High Court yesterday gave Mr Raval the green light to acquire Kenya’s second-biggest cement maker for Sh5 billion, raising doubts that a consortium, including Mr Rai and former ARM chief executive and owner Pradeep Paunrana, could raise their Sh6.5 billion offer.
Mr Paunrana had sued to block the sale of ARM through an auction after banks placed it under administration on grounds that its bigger offer had been ignored.
Justice Mary Kasango said Mr Rai was not part of the court process challenging the sale and that his late inclusion in the Sh6.5 billion offer introduced ‘hidden’ clauses the court was not privy to.
“It does seem that the applicant’s guarantee is conditional or dependent on a ‘consortium agreement’ whose terms, unknown not only by the respondents but also by this court, is to leave the transaction exposed and vulnerable,” Justice Kasango said.
“It is almost like introducing a hidden card or a hidden motive.”
The court had frozen the sale of ARM pending the tabling of a 20 per cent guarantee of the Sh6.5 billion offer by Mr Mr Paunrana by September 10
PwC, which is acting as ARM administrator, did not accept the Sh1.3 billion guarantee, arguing it was presented on the strength of Mr Rai whom the consultancy firm considered a stranger in the bidding process.
Justice Kasango agreed with PwC, paving the way for the distressed ARM to be bought by National Cement—which emerged as the winner of a bidding round to buy the company’s Kenyan assets, including land and plants.
ARM, once the second biggest cement maker in Kenya behind Bamburi Cement, was put under administration last August by some of its creditors over debts totalling Sh19 billion. Its shares were then suspended from the Nairobi bourse.
The court ruling stalls Mr Rai’s bid for a larger stake of Kenya’s cement business after it established a smaller cement plant in Awasi, Kisumu County.
The Rai Group has interests in wood manufacturing, sugar milling as well as the manufacture of cooking oil and soap.
It pursues these interests through its subsidiaries — Menengai Oil, Western Kenya Sugar, Sukari Industries and Olepito Sugar Company.
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