Mumias Sugar Company.[Photo/kenyaforum.net]
Three commercial banks recalled Sh2.6 billion loans they had disbursed to the insolvent sugar miller Mumias, testing efforts to rescue it from liquidation.
Ecobank Kenya, and Commercial Bank of Africa have demanded to be paid their Sh1.7 billion, Sh480.1 million and Sh364.5 million loans respectively, breaking ranks with other lenders, including French investment fund Proparco, who are owed Sh9 billion.
Mumias, says it is relying on government support to restructure the liabilities even as banks continue to charge interest penalties. The company is in default on principal and loan repayments.
"With the exception of Proparco, Kenya Sugar Board and the National Treasury, all the other lenders have issued demand letters requiring immediate payment of all sums outstanding,” Mumias says in the report “The company, together with anchor shareholder, the Government of Kenya, have initiated a structured process to discuss with the lenders with a view to restructuring the debt liabilities.”
The government, has already bailed out the company to the tune of Sh3.5 billion but this has since been spent, with no progress in its earnings or capital position.
“The directors will initiate discussions with stakeholders to seek further financial support to implement its turnaround strategy,” the company says, adding that it has received a letter of support from the government.