Mumias Sugar Company entrance. FILE PHOTO | NMG Mumias Sugar Company has shut down its only revenue stream, plunging the firm into deeper financial woes.
The firm has been relying on ethanol for its survival but production was halted as Mumias Sugar now has to consult the receiver manager before transacting any business at its Kakamega-based plant.
Local political leadership ejected the manager sent on site by Kenya Commercial Bank (KCB) Group after the miller was placed under receivership three weeks ago.
“We are not conducting any business now at the firm but we are in talks with the receiver manager to ensure that we go back to business as soon as possible,” said Mumias chairman Ngumbau Mulwa.
Dr Mulwa said they had “a number of meetings” with manager and had agreed on “a number of things that would lead to resumption of activities” at the firm.
The struggling miller was placed under administration last month after it defaulted on loans amounting to Sh545 million owed to KCB.
The lender was, however, stopped by the High Court from selling any assets belonging to Mumias Sugat or making any changes in the company.
A meeting held by creditors and county government of Kakamega last week resolved to appoint an administrator who would be answerable to all parties and not just one creditor.
Mumias, majority-owned by the government and for a long time Kenya’s largest miller, has not been producing sugar for close to a year and has mainly been relying on ethanol for its existence.
Mumias’ loans stood at Sh12.5 billion at the end of June 2018. It owed Ecobank Kenya (Sh2 billion), French development finance institution Proparco (Sh1.9 billion) and Commercial Bank of Africa (Sh401 million).
Other creditors are the Treasury (Sh3.1 billion) and Kenya Sugar Board (Sh1.6 billion). Mumias was also operating on bank overdrafts worth Sh2.7 billion from various lenders.Its total assets at June 30 last year stood at Sh15.7 billion against the total liability of Sh21.6 billion.