ARM Cement, once Kenya's second-largest cement maker, owes about $190 million to a range of creditors, including local commercial banks. ARM's creditors in October approved the sale of some assets to cut debt.
The creditors did not identify which subsidiary or assets would be sold, or the possible value of a sale, under a rescue plan, designed to keep the company operational.
Dangote Cement has not conducted due diligence on ARM Cement, the source said.
Dangote Cement, owned by Africa's richest man Aliko Dangote and operates in more than 14 African countries, has been expanding across the continent in recent years.
The company has about a 45 percent market share in sub-Sahara Africa with an annual production capacity of around 45 million tonnes. Dangote Cement has been seeking to double that capacity.
(Reporting by Chijioke Ohuocha; editing by Jason Neely/Alexis Akwagyiram/Jane Merriman)
By Chijioke Ohuocha