KCB loses sole operation rights of Mumias Sugar
The revival of the once regional sugar milling giant Mumias Sugar Company has received a setback after a ruling by the High Court directed Mumias Sugar Company receiver manager, Venkata Ramana Rao to involve the other creditors on the miller’s operations.
Mr. Rao who was appointed by KCB when the miller was placed under receivership in 2019 has been running the ailing miller under the sole direction of KCB.
Under the initial leasing deal, the successful bidder was to run the plant on behalf of the lender for up to 25 years and pay the lender monthly leasing fees.
However, the latest court ruling is likely to affect the deal as the winning bidder will now need the approval of top creditors and not just KCB.
Through the ruling by Justice Alfred Mabeya, Mr. Rao will now take orders from all the entities owed by the sugar company through a creditors committee that will include KCB’s (owed Ksh545 million), Ecobank Kenya (Ksh2 billion), French development finance institution Proparco which financed the construction of the power plant at Mumias (Ksh1.9 billion), and Commercial Bank of Africa (Ksh401 million) among others.
The receiver manager will also be required to file a report on the miller’s operations, including financial dealings after every six months.
The other creditors have been protesting KCB’s sole right over the miller, accusing the banker of sidelining them on the daily running of the miller and critical decision making. In May this year, a court petition from over 100 creditors went against the KCB’s favor after it was barred by Justice Mabeya from selling any of the miller’s movable assets in a bid to recover its 545-million-shilling loan.
The miller through a private treaty between the investor and the bidders received a total of eight leasing bidders according to Mr. Rao as stakeholders move to revive the miller back to its glory days.
Businessman Julius Mwale, placed the highest bid of Ksh27.6 billion, steel tycoon Narendra Raval offered Ksh8.4 billion through his Devki Group, while billionaire Rai family through West Kenya Sugar offered Ksh3.5 billion.