Court rules Bamburi Cement has capacity to pay Sh3.3 billion claim

Bamburi Cement Factory on Mombasa road.[Wilberforce Okwiri/Standard] The Court of Appeal in Mombasa has ruled that Bamburi Cement has sufficient assets to offset the Sh3,374,684,920 owed to Roy Hauliers Limited in a breach of contract claim. Justices Francis Tuiyott, Pauline Nyamweya, and Weldon Korir declined to order Bamburi Cement to deposit the money pending arbitration to settle the claim. The appellate judges said that requiring a cash deposit of the said amount was unnecessary and would be oppressive to Bamburi. They noted that Bamburi Cement is valued at over Sh60 billion, far exceeding the potential arbitral claim by Roy Hauliers Limited. "Unwittingly, this is a concession by Roy that Bamburi has sufficient assets to meet the claim of Sh3,374,684,920.23 should it prevail at arbitration, as there is no evidence, nay, not even an allegation, of asset stripping or that the company's assets are being moved out of Kenya," said Justice Towett. The judges set aside Justice J. Mong'are's orders directing Bamburi Cement to deposit security of Sh3,374,684,920 from the sale of the company's shares over the alleged breach of contract. They allowed a notice of motion seeking to stay Justice Mong'are's orders. "The order of the High Court (Mong'are, J) of March 6, 2025, in High Court Commercial Case No. E777 of 2024 is hereby stayed pending the hearing and determination of the intended appeal. Costs of the motion shall be in the intended appeal," said Justice Towett. Bamburi Cement argued that the amount to be deposited was nearly equal to its annual cash flow. The cement producer said its audited financial statements for the year ending December 31, 2023, showed that its cash and cash equivalents amounted to Sh3.693 billion. It said that forcing it to part with an amount nearly equal to its annual liquidity would severely undermine its ability to operate as a going concern. Bamburi added that it is a publicly traded company with 871 suppliers and 357 direct employees, supporting more than 5,000 families, and that its continued operation should not be impeded by an order requiring security for what it termed a speculative claim. The company argued that since it would have to raise the deposit from its own funds and lacks control over the proceeds from the sale of shares, its cash flow would be severely and adversely affected. The judges agreed, noting that the effect on Bamburi's cash flow would be just as onerous whether the money was deposited as security or paid out to Roy Hauliers Limited, as the actual deposit would still have to be made. "It is clear to us that not granting a stay could cause extreme hardship to Bamburi. In reaching that decision, we are alive to Roy's argument that it could be left with a paper award if no deposit as security is made," said Justice Towett. In its appeal, Bamburi Cement said Justice Mong'are failed to consider that Amsons had indicated it would continue operating Bamburi's business in the same manner as before. The company maintained that the shares sold did not belong to Bamburi itself and that the court's order directing it to deposit money from the proceeds of the sale was misplaced. It argued that the sale of shares was not a sufficient basis for such an order and that the directive to deposit security for Roy's claim was harsh and onerous, as it would strain the company's cash flow in its capital-intensive operations. However, Roy Hauliers Limited defended Justice Mong'are's order, saying it was meant to preserve and protect its interests from potential sabotage following what it termed as Bamburi's suspicious conduct in disposing of shares to a third party. The logistics firm argued that Bamburi's "controllership" was on the brink of a takeover by another company, a move that could disrupt the status quo to Roy's potential detriment.

Court rules Bamburi Cement has capacity to pay Sh3.3 billion claim

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