This archive report was first published on 24 September 2019.
Published on September 24, 2019, by Victor Juma in More by this Author
KCB Group has taken drastic measures to protect its interests after Mumias Sugar Company defaulted on loans worth Sh12.5 billion. The bank has placed the miller under administration, effectively kicking out the company's board and management.
The move, which was announced on Tuesday, is expected to be followed by the suspension of Mumias' shares from trading on the Nairobi Securities Exchange (NSE). This is in line with the Capital Markets Authority's previous response to similar events at other publicly traded firms.
According to KCB, the administrator will be responsible for protecting the company's assets, maintaining operations, and bringing the miller back to financial stability. The bank has also stated that it is pre-empting more punitive actions sought by other creditors, including the auction of Mumias' assets.
Unsecured creditors have already obtained court orders attaching the miller's assets, and KCB says it will work closely with the administrator to ensure a transparent turnaround process. However, it remains unclear whether the administrator will receive new funding to help turn around Mumias, which has since stopped producing sugar.
