A tender for the leasing of debt-ridden Mumias Sugar has attracted eight firms, including the Devki Group- a steel and cement manufacturing conglomerate run by tycoon Narendra Rava.
The giant miller was placed under receivership by KCB Group in September 2019 after it failed to clear loans amounting to KSh545 Million owed to the lender.
KCB appointed Ponangipalli Venkata Ramana Rao as the sugar miller’s receiver-manager to protect its assets and recover its loans.
Mumias Sugar had defaulted on loan repayments to its lenders and had not paid any dividends to shareholders for eight years.
Mumias Sugar financial woes
On September 20, 2019, KCB Group wrote to the receiver to use all powers as issued in the KCB Debentures agreements and in the laws of Kenya to recover defaulted Mumias payments in full.
KCB Group had in 2017, together with Ecobank and Commercial Bank of Africa, loaned the embattled sugar miller a total of KSh2.6 billion to assist the miller run operations after undergoing tight financial strain.
KCB Group decided to take over Mumias Sugar after the miller failed to clear a total of KSh 480.1 Million debt it had disbursed to the insolvent firm.
Ecobank and CBA had both loaned Mumias Sugar KSh1.7 billion and KSh364.5 Million in loans, respectively.
Mumias Sugar Company is Kenya’s leading producer of Sugar and diversified products, including Ethanol and Bottled Water. The Company also generates significant quantities of electricity.
The successful bidder for Mumias Sugar is expected to pump capital into the miller and repair its ageing machinery.
The state has put several measures to revive the sugar sector, including writing off off debts of State-owned mills and out-grower institutions, stopping the importation of brown Sugar and privatisation of the factories through a long-term lease model.
Mumias has depended on ethanol as the primary source of income after other revenue streams such as water, cogeneration and sugar production were closed.
Over the last couple of weeks, potential investors have been conducting surveys at the firm, including carrying out a cane census to establish raw material availability.
Mumias Sugar has remained financially crippled even after the state put in a bailout plan worth KSh 3 Billion to revive its operations.
ALSO READ: Relief for Mumias Sugar as KSh 11 Billion Tax Bill Waived
