The government on Friday agreed on a Sh5
billion deal with lenders to revive Mumias
Sugar that will see the board and management
of the company sent home.
The turnaround will involve weeding out
“sugar brokers” who have made the prices of
sugar from the company uncompetitive and
retrenchment of about 300 staff.
The deal hammered out in a meeting chaired
by Deputy President William Ruto will see
more than 50 per cent of the board sent home
and changes in the firm’s management.
Audit firm KPMG will be appointed to oversee
the restructuring that will see issuance of a
rights issue to inject Sh4 billion to the ailing
Mr Ruto announced the measures after
chairing a meeting attended by National
Treasury Principal Secretary Kamau Thugge,
Mumias Board chairman Dan Ameyo, Chief
Executive Officer Coutts Otolo and
representatives of creditors.
“We have to take these measures so that
farmers in the region can be paid for delivery
of sugarcane,” Mr Ruto said.
The restructuring starts in earnest with the
board directed to notify shareholders of an
Annual General Meeting and appointment of
the audit firm.
Mr Ruto said the government would release
Sh1 billion within a week when the audit firm
is on the ground.
The funds will be used to pay farmers
outstanding arrears and put the company
back to its feet.
However, he requested members of the board
to voluntarily resign for failing the company
or they will be fired.
The decision was reached after month-long
consultations among the lenders, the board,
the management, and the government.
The decision came just a day after farmers
held violent demonstrations in an attempt to
evict the management, whom they accused of
failing to pay them for cane deliveries.
Mr Ruto said the sugar company has to
provide farm inputs at the right price and
also sell its sugar at a competitive prices.
Mumias Sugar Company’s current status is
attributed to mismanagement.
The announcement of the bailout came on a
day that the sugar company said its loss
widened to Sh2.08 billion from a restated
Sh407.4 million loss last year.
The firm, whose sugar output accounts for
about a third of Kenya’s annual sugar output,
said net revenues for the period ending
December fell 62 percent to Sh2.67 billion.
The company said the loss was largely due to
an unscheduled and out-of-crop maintenance.
“The revenues were impacted by the
production time lost during the two and a half
months maintenance shutdown as well as
cane shortage and a lower average net cane
price per tonne of sugar realised during the
first quarter,” they said.
“Despite the challenges … the company looks
forward to better performance in the second
half of the year following successful
resumption of production,” it said in a
Low sugar production, high production costs
and low prices resulting from illegal sugar
imports further compounded the company’s
half year loss, the firm said.
KAMAU THUGGE NEWS, NATIONAL TREASURY PRINCIPAL SECRETARY NEWS, DAN AMEYO NEWS, MUMIAS BOARD CHAIRMAN NEWS, COUTTS OTOLO NEWS, CHIEF EXECUTIVE OFFICER MUMIAS SUGAR COMPANY NEWS )