This archive report was first published on 6 November 2019.
On November 6, 2019, KCB Group took control of Mumias Sugar Company after the debt-ridden firm defaulted on loans worth Sh12.5 billion.
The move led to the termination of all employee contracts, with the bank citing the date of receivership as the reason for the termination.
According to the receiver manager, PVR Rao, the company would engage some employees on a temporary basis, indicating that some workers might be recalled under new terms as the bank seeks to revive the once-dominant miller.
The struggling miller was placed under administration in September after it defaulted on loans amounting to Sh545 million owed to KCB.
Mumias, which was suspended from trading at the Nairobi bourse, joins a growing list of distressed firms that have gone into administration.
The firm's loans stood at Sh12.5 billion at the end of June 2018, with Mumias owing KCB Sh545 million, Ecobank Kenya (Sh2 billion), French development finance institution Proparco (Sh1.9 billion), and Commercial Bank of Africa (Sh401 million).
Other creditors include the Treasury (Sh3.1 billion) and Kenya Sugar Board (Sh1.6 billion), with Mumias operating on bank overdrafts worth Sh2.7 billion from various lenders.
Reviving the miller will require an injection of substantial new capital, with a task force set up by the Kakamega county government estimating that the miller requires at least Sh5 billion to resume operations.
