Riley to buy Kenya’s pulp maker
Mar 26, 2009
RILEY Packaging, the region’s largest manufacturer of packaging materials, is bidding to take over the Pan African Paper Mills (Panpaper), East Africa’s largest producer of pulp and paper after the company was put under receivership last week.
By David Mugabe
RILEY Packaging, the region’s largest manufacturer of packaging materials, is bidding to take over the Pan African Paper Mills (Panpaper), East Africa’s largest producer of pulp and paper after the company was put under receivership last week.
Panpaper, a pulp mill established in 1974 in Webuye town, western Kenya, is a joint venture between the Kenya government (34%), the International Finance Corporation, the World Bank’s private investment arm, and Orient Paper Mills, part of the Birhla Group of India.
The firm folded last month, rendering some 1,500 permanent staff and another 30,000 casual workers redundant.
Sources disclosed this week that the Riley management has started the possible buyout discussions. “Yes, we are interested in bailing out Panpaper and we are in the initial stages of negotiations.
“We have the capacity to see Panpaper up and running once again,†said a top source. Reports indicate that Panpaper owed its suppliers about sh175b in debts and was put under receivership by debenture holders last week.
For Panpaper to resume business, sources explained, sh55b would be required in fresh capital injections. Officials at Begbies Traynor, the receiver company handling the process, declined to comment on the matter.
If successful, the interest from Riley Packaging, a partnership between Mukwano Industries and Mara Group sparks off a reversal of business movement that has seen most Kenyan companies move into Uganda and either set up shop here or merge or acquire local firms.
Little has happened in the opposite direction where Ugandan firms have moved into Kenya and attained a major presence there. Mukwano is a leading maker of industrial products including cooking oil, soap and other detergents. Mara Group is behind the Kensington Apartments and Raps Uganda.
Both Mara Group and Mukwano Industries are involved in massive real estates development. It is not clear how many other companies are bidding to take over Panpaper.
RILEY Packaging, the region’s largest manufacturer of packaging materials, is bidding to take over the Pan African Paper Mills (Panpaper), East Africa’s largest producer of pulp and paper after the company was put under receivership last week.
Panpaper, a pulp mill established in 1974 in Webuye town, western Kenya, is a joint venture between the Kenya government (34%), the International Finance Corporation, the World Bank’s private investment arm, and Orient Paper Mills, part of the Birhla Group of India.
The firm folded last month, rendering some 1,500 permanent staff and another 30,000 casual workers redundant.
Sources disclosed this week that the Riley management has started the possible buyout discussions. “Yes, we are interested in bailing out Panpaper and we are in the initial stages of negotiations.
“We have the capacity to see Panpaper up and running once again,†said a top source. Reports indicate that Panpaper owed its suppliers about sh175b in debts and was put under receivership by debenture holders last week.
For Panpaper to resume business, sources explained, sh55b would be required in fresh capital injections. Officials at Begbies Traynor, the receiver company handling the process, declined to comment on the matter.
If successful, the interest from Riley Packaging, a partnership between Mukwano Industries and Mara Group sparks off a reversal of business movement that has seen most Kenyan companies move into Uganda and either set up shop here or merge or acquire local firms.
Little has happened in the opposite direction where Ugandan firms have moved into Kenya and attained a major presence there. Mukwano is a leading maker of industrial products including cooking oil, soap and other detergents. Mara Group is behind the Kensington Apartments and Raps Uganda.
Both Mara Group and Mukwano Industries are involved in massive real estates development. It is not clear how many other companies are bidding to take over Panpaper.