NAIROBI Nov 23 Kenya's East African Portland
Cement aims to sell land and shed 1,000 workers -- two
thirds of its staff -- to cut debt and try to revive its
fortunes after its market share plummeted, its chairman said.
Portland, 52 percent owned by the state, was found
technically insolvent in a November report by Kenya's
auditor-general, because its liabilities outstripped assets.
But board chairman Bill Lay told Reuters that Portland owned
15,000 acres of land near the capital Nairobi and said it was
worth more than the 10 billion shillings ($98 million) needed to
finance a turnaround for the company.
"If we were able to extract all the value of our land assets
we would be able to retire our debts, right size our workforce,
pay our creditors and we would have cash in the bank," he said.
The company reported a pretax profit of 3.7 billion
shillings for its year to the end of June but that was mainly
due to valuation gains on its assets like land. It lost 1.5
billion shillings from operations during the period.
The earnings report was delayed for several weeks due to
queries raised by the auditor general.
Portland owes 6 billion shillings to local banks, as well as
other debts that include a yen-denominated loan.
Lay, a former General Motors executive who was appointed
chairman three years ago, said the firm planned to spend 2
billion shillings on the voluntary early retirement of 1,000
workers once funds became available.
"Portland has an excessive, bloated workforce," he said,
adding only 500 workers would remain once that was completed.
He said the government had expressed interest in using some
of the land for other projects. "We have been talking to them
about various options, like they give us an advance on the sale
of the land," the chairman said.
If land selling did not proceed, Portland could bring in a
strategic investor to inject the required funds, Lay added.
The firm, more than 40 percent owned by Swiss building
materials manufacturer LafargeHolcim, has seen its
market share plunge by half in the last three years, to just 12
percent, weighed down by high costs and nimbler rivals who have
invested in new technology.
Portland competes with Bamburi Cement, ARM Cement
and three other firms. Its shares are down 54 percent
this year to trade at 21 shillings each.
($1 = 101.7500 Kenyan shillings)
(Editing by Edmund Blair, Helen Reid/Keith Weir)