Nairobi — Bamburi Cement says its sale of Athi River Mining (ARM) shares was informed by profit taking and the need to generate cash flow during its regional expansion programme.

The Lafarge-dominated firm, in its first public comment on the matter, said rising regional investment in cement also called for diversification by producers.

The firm has lately been in the news after disposing of about 12 per cent of the 14 per cent stake held in ARM.

Strategic reasons

Bamburi initially invested Sh180 million worth of convertible bonds in 2000 which later gave them 19 per cent of the shareholding.

However, they sold four per cent to remain with 15 per cent, which was later diluted to 14 per cent by ARM employee share scheme.

"The sale was more for strategic reasons; we have substantially reaped the benefit of the investment and the need to continue to hold a stake at ARM has been diminished by the direction our business wants to take," said finance director Joshua Oigara in notes sent to the media.

Bamburi first sold 10 per cent on Monday last week before placing another 2 per cent on sale last Friday.

They now remain with an insignificant 2 per cent which they are expected to sell.

Mr Oigara clarified that the shares had been sold to diverse foreign investors contrary to some media reports suggesting the blocks of shares had been flogged off to a consortium.

Foreign investors

Without disclosing the identities of the foreign investors, he said the company was lucky to get buyers who were immediately able to pay for the purchase.

Exit of Bamburi from ARM where it retained a board position until June, has raised speculation that Lafarge could as well pull out of East African Portland Cement Company where it sits on the board and holds about 14 per cent of the stake.

Highly placed sources within both companies, however, say this is not on the cards.

Major role

Mr Oigara hinted that ouster of its board member and need to conserve cash played a major role in the Bamburi decision.

"Divesting from ARM is indeed positive for both our businesses given the change in market structure," he said.