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Sarrai sets aside initial Sh1.1bn for jumpstarting Mumias Sugar

Mumias was in September 2019 placed under receivership by KCB Group

Story Highlights
  • Sarrai Group said the funds, which are only the first batch of capital, would be key to starting the operations at the initial stage with more funds to be injected in due course.
  • “Sarrai Group confirms that works to turnaround Mumias Sugar Company Limited (In Receivership) have formally commenced following the asset takeover of December 23, 2021,” said the firm.

The Ugandan investor who won the Mumias leasing award will invest Sh1.1 billion to jump-start operations at the ailing miller.

Sarrai Group said the funds, which are only the first batch of capital, would be key to starting the operations at the initial stage with more funds to be injected in due course.

The leasing fee that the Sarrai had bid would go towards paying Mumias creditors to free it from the receivers’ hands. The Ugandan-based company had bid Sh17 billion in leasing fees.

“To start operations in the projected six to eight months, Sarrai will inject $10 million (Sh1.3 billion),” the company told the Business Daily.

The firm has already started operations at the Mumias Sugar Complex and has been ploughing the miller’s nucleus farm in readiness for planting sugar cane.

This comes in the backdrop of a court case that had suspended the leasing of the miller to the Sarrai Group, pending the hearing of a case filed by Tumaz and Tumaz, which had placed the highest bid in its quest to get the award.

“Sarrai Group confirms that works to turnaround Mumias Sugar Company Limited (In Receivership) have formally commenced following the asset takeover of December 23, 2021,” said the firm.

“We’ve finished ploughing over 400 hectares of the nucleus estate in preparation for the planting season. We are also in the process of servicing the tractors and other moving vehicles as well as rehabilitate machinery in the plant that had been idle for over three years.”

The company says it has invited qualified staff who were previously on the payroll of the company to reapply for validation by the human resource committee, and subsequent rehiring.

“Our turnaround team is working with a schedule to resume operations at what was Kenya’s largest sugar manufacture within the next six-eight months. We remain steadfast in our commitment to roar Mumias Sugar Limited back to its former glory,” said the investor.

The company said the ongoing activities are not in contempt of any court orders as the stay on quashing the implementation of the leasing award was granted by the court on December 29 after the lease had already been executed and awarded on December 22.

The High Court suspended the leasing of the firm to this Ugandan investor after Tumaz, a company associated with US-based Kenyan investor Julius Mwale moved to court challenging the process.

Tumaz and Tumaz had requested a stay order against the first respondent (receiver-manager Ponangipalli Venkata Ramana Rao), his servants, agents, principal and employees from executing any lease agreement or contract in respect to the leasing and operation of the assets of Mumias Sugar Company Limited.

The leasing of Mumias has received political goodwill with former Prime Minister Raila Odinga introducing the new investor to the people of Kakamega at the end of last year during a public rally that was held in the county.

The move is seen as crucial to the revival of the once giant miller given that last year, the process of reviving Mumias was politicised, forcing Devki Group of companies which was at the verge of being issued the lease award to pull out.

Mumias was in September 2019 placed under receivership by KCB Group

to protect its assets and maintain its operations. The lender has been barred from auctioning the plant to secure assets used as security for other loans, prompting it to turn to the lease option.

Mumias owes Proparco Sh1.84 billion secured using the electricity generation plant, Ecobank Sh1.77 billion on the ethanol plant, and the Treasury Sh2.83 billion. Banks it owes more than Sh3 billion include KCB, NCBA and Stanbic Bank .

Via
Gerald Andae
Source
Business Daily

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