Mumias Sugar Company (MSC) has been placed under receivership by KCB Bank Group following the execution of a lenders agreement deed dating back to September 2010. The bank has also appointed Tact Consultancy, headed by Ponangipalli Venkata, as the receiver manager to run the troubled firm.
The receiver will immediately take-over the day-to-day running of the MSC as the firm’s assets are transferred to the statutory management of the newly-appointed care-taker.
For this reason, the receiver has written to the directors of the sugar company requesting for the disclosure of all company particulars in support of the statement of company affairs.
KCB took applied for a court order and was granted so as to execute the receivership arrangement. The receivership followed consultations between KCB and inter-lenders who are owed an estimated sum of Ksh.6 billion by the under-performing sugar miller.
Mumias Sugar Company net liabilities outstrip net assets by Ksh.5.9 billion according to the company’s last financial disclosure. This exacerbates the firm’s ongoing difficulties to meet its outstanding obligation to creditors.
The company has been on a run of commercial debt uptake over the past four decades. In this period, MSC has accumulated loans totaling to Ksh.1.3 billion between May of 1975 and July 2002 from just a handful of lenders including Barclays and Stanbic Bank.
Mumias Sugar Company owes Kenya Power and the Kenya Revenue Authority (KRA). The company owes KRA a sum total of Ksh.10 billion in outstanding taxes.
The takeover of Mumias Sugar operations by the KCB Group comes in just weeks since the County of Kakamega moved it to save the miller from imminent demise having put forth a business turnaround structure which if successful would see the devolved unit take up a controlling stake in the struggling company.
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