Kenya Commercial Bank (KCB) Group has taken over the management of loss-making Mumias Sugar Company after the miller defaulted on loans amounting to Sh12.5 billion it owes the bank and other creditors.
The lender says that placing the miller under administration is meant to protect the company’s assets, maintain operations and bring the miller back to financial stability.
In effect, the bank has appointed Mr. PVR Rao (Tact Consultancy Services) as the sugar company’s receiver-manager.
“KCB Group can confirm that Mumias Sugar has been placed under receivership to protect the listed firm’s assets,” the firm said.
The bank further said that it will take other austere actions sought by other creditors including the auction of Mumias’ assets.
The receiver will take-over the day-to-day running of the Mumias Sugar Company pending the transfer of the firm’s assets to the statutory management of the newly-appointed care-taker.
Following the appointment of PVR as receiver managers, the miller has had its shares suspended from trading at the Nairobi Securities Exchange (NSE),
The bank is among many creditors owed billions by the once giant company, the lenders initially rejected the firm’s plea to restructure loans.
The government, which also has a 20 percent stake in the company has also refused to provide additional bailout funds.
Mumias was once the largest miller with a capacity to crush 9,000 tonnes of cane daily, it drastically reduced its production despite the government bailing out the company to the tune of Sh3.5 billion.
Featured Image Courtesy: The Standard