Bloomberg News

Africa Finance May Get Stake in Kenya’s Athi River

March 29, 2012

(Corrects Kenya tonnage in fourth paragraph.)

Africa Finance Corp., a Nigeria- based development-finance institution that’s providing a $50 million convertible loan to Athi River Mining Ltd. (ARML), may get a 13.62 percent stake in the Kenyan cement maker if the loan is converted into equity, Athi River said.

Africa Finance is providing the loan to help fund an expansion by Kenya’s second-biggest cement company in eastern and southern Africa, including adding 1 million metric tons of production capacity, Athi River said in a statement on March 27.

“If AFC wants to convert the loan into shares then they will at $3.3 per share,” Julius Nyabicha, a company spokesman, said in a phone interview from Nairobi, Kenya’s capital, yesterday. The conversion amount is higher than Athi River’s share price “because we want to avoid dilution,” he said.

ARM, as the Nairobi-based cement company is known, said it plans to increase annual production capacity to 2.6 million tons in East Africa by next year. Output in Kenya will be 1 million tons, Tanzania 1.5 million tons and Rwanda 100,000 tons, it said.

“The loan has already been approved by AFC so we are now waiting for approval from Capital Markets Authority,” Nyabicha said. “CMA comes in because the loan is convertible into equity” within six years.

Cement Production

ARM currently produces 40,000 bags of cement at its plant in Athi River, 25 kilometers (16 miles) southeast of Nairobi, and 30,000 bags at another plant at Kaloleni in the port city of Mombasa, Nyabicha said on March 9. Each bag of cement weights 50 kilograms (110 pounds).

A 750,000-ton per annum grinding plant in Dar es Salaam, Tanzania’s commercial capital, is currently being commissioned and will be operational by June, the company said. A 1.2 million-ton clinker plant in the town of Tanga, with a second grinding plant of 750,000 tons that is also under construction, will be operational early next year, it said.

Shares in Athi River gained 0.6 percent to 162 shillings at 12 p.m. in Nairobi today. The stock has advanced 8 percent so far this year, in line with a 7.8 percent gain in the benchmark NSE-20 Index (KNSMIDX) over the same period.

To contact the reporter on this story: Eric Ombok in Nairobi at

To contact the editor responsible for this story: Shaji Mathew at

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