Khayah Cement opens bids for new investors as creditors approve delisting

Creditors of Khayah Cement have approved a plan to delist from the Zimbabwe Stock Exchange, setting the stage for the exit of majority shareholder Fossil Mining, just three years after its takeover of the country’s second-largest cement producer.

Bulisa Mbano of Grant Thornton, who was appointed corporate rescue practitioner after Khayah entered business rescue last year, has now issued a call for new investors into the company.

Mbano proposed take the company off the ZSE, arguing that delisting is critical to the turnaround strategy, allowing the company to restructure away from the scrutiny of the public market.

At a meeting on Monday, the creditors approved the plan.

New investors are now being sought, Mbano says in a notice, giving prospective investors up to June 13 to place their bids.

Fossil Mining acquired 76.45% of Khayah, then trading as Lafarge, from Holcim in 2022 for $29.7 million, aiming to tap into strong local cement demand.

However, by 2024, the company was in distress, grappling with inherited debt, delayed maintenance, operational inefficiencies, and the impact of US sanctions on Fossil and its shareholders.

The company owes nearly $70 million to over 120 creditors, including debts inherited from Holcim.

According to Mbano, operating as a private entity will give Khayah the agility to negotiate with creditors, cut costs, and restructure operations more effectively.

“This agility is crucial for executing time-sensitive actions, such as cost-cutting initiatives or operational realignments, which are pivotal to the company’s rehabilitation,” Mbano said in his April proposal.

Khayah’s assets include a running Vertical Cement Mill with an installed capacity of 700,000 tonnes per annum, and two mothballed ball mills (Cement Mill 1 and 2) with a combined annual capacity of 450,000 tonnes.

Its kiln — with a clinker capacity of 26,000 tonnes per month — was already three years overdue for major maintenance when Fossil assumed control.

NewZWire