East Africa Portland Cement (EAPCC) has chopped up a 1,000-acre parcel of land into tiny portions in a bid to expedite its sale, targeting to raise Sh5 billion towards its work capital and debt repayment.
The parcel sits adjacent to three others measuring a combined 907 acres, which the State agency is also seeking to offload to a group of squatters for another Sh5 billion. EAPPC targets Sh10 billion from land sales.
The company management said in a disclosure that the 1,000-acre parcel has been subdivided into 50-acre plots to speed up a planned sale, which targets to realise Sh5 billion.
“The company has also subdivided 1,000 acres of the adjacent property LR10424 (next to the 907-acre parcel) into 50-acre plats which are on sale with expected proceeds totalling approximately Sh5 billion,” it said.
The cement maker last year revised its terms for settling dozens of squatters on its 907 acres in Athi-River—handing them a flexible three-year payment window. The squatters settled on the land in 2010 after the company advertised its intention to dispose of the piece after exhausting limestone deposits.
The revised terms follow talks between the listed cement maker and the squatters, with the company now settling on a flexible three-year payment plan as opposed to one year.
According to the deal struck in September last year, a plot measuring 40 by 80 feet will be sold at Sh600,000. Buyers were issued three-month notices to put down their deposits for their land. At the lapse of the notice, unregistered pieces will be sold to the general public through open bidding.
The cement manufacturer has been looking to dispose of some of its extensive land holdings in Athi River to fund a restructuring of its balance sheet --mainly to pay debt and bridge a working capital deficit.
EAPP in October said it had completed the settlement of a Sh6.8 billion loan from KCB via land transfers to the lender, cutting its finance costs by Sh735 million in the year ended June 2022.
The KCB debt was initially in form of several facilities meant to cover working capital. But after a breach of covenants, the lender recalled the debt and subsequently entered into a settlement deed with EAPCC in 2019 where the facilities were consolidated into one term loan.
EAPCC shareholders then resolved to dispose of investment property to retire the KCB debt, and by June 2021 had transferred land to the lender which yielded a reduction of Sh4.85 billion on the loan. The balance has now been cleared through a further transfer of land to the lender.