Pan Paper’s Sale Sets Stage for Miller’s Revival
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The sale and purchase agreement signed between the Joint Receivers of Pan Paper Mills (in receivership) and a strategic investor has paved way forthe revival of the paper miller who will invest $60m.
The purchaser of the miller’s assets, Tarlochan Limited, a subsidiary of Rai Group of companies, will take over the running of the once vibrant icon of Kenya’s manufacturing sector. The purchaser indicated that it will invest an estimated Kshs 6Billion in the next five to ten years. The Rai group has interests in agro-forestry, farming, saw milling, paper milling, wheat milling, edible oils and fats, and sugar in the wider Eastern Africa region. They also have requisite experiencing in reviving Mufundi paper miller in Tanzania.
Pan Paper Mills, which was incorporated in 1969 with Orient Paper industries Limited, Government of Kenya and the International Finance Corporation, as the principal shareholders, was placed under receivership on 20th March 2009, after failing to service its
debt obligations. The decision to sell the paper miller was made by the secured lenders who are owed in excess of Kshs 6 Billion.
Speaking during a media briefing, the joint receiver, Mr. Kuria Muchiru said: “We are delighted that the agreement reached with Tarlochan Limited to purchase the assets of Pan Paper Mills is progressive and will lead to the re-birth of an asset on the brink of significant deterioration. This is a groundbreaking receivership process that started with a global search for an investor with
requisite capability to restore and grow the local paper milling capacity as well as free the business from mounting debts. Whereas, the lenders may not have actualized the full recovery of their debt, a greater gain with potential positive long term prospects for the region has been realized.”