This archive report was first published on 25 September 2019.
Published on September 25, 2019, Kenya Commercial Bank (KCB) has taken drastic measures to protect its assets by placing Mumias Sugar under receivership.
The decision comes after the cash-strapped sugar miller defaulted on a Sh12.56 billion loan owed to creditors, including KCB, Ecobank Kenya, and Commercial Bank of Africa.
As part of the receivership, KCB has appointed PVR Rao of Tact Consultancy Services as the receiver manager for Mumias Sugar.
Notably, in January 2019, the three banks recalled the Sh2.6 billion loans they had disbursed to the insolvent firm, breaking ranks from other lenders, including French investment fund Proparco, who are owed Sh9 billion.
Financial records show that Mumias Sugar's current liabilities exceeded its current assets by Sh21 billion for the year ending June 30, 2018, compared to Sh15.2 billion in 2017.
The company incurred a significant loss of Sh15.1 billion during the period, compared to Sh6.7 billion in 2017.
According to Mumias Sugar Chairman Kennedy Mulwa, the loss was attributable to acute cane shortage and loss of farmer loyalty, which led to low production and underutilization of the factory operations.
