After a month long consultation among lenders, the management and the board, the Government has agreed to pay KES5bn to Mumias Sugar Company in its revival plan. The amount to be paid by government and shareholders will see up to 300 Mumias Sugar Company workers including top managers and half of the board of directors sent home. Kenya’s biggest sugar producer employs about 1,900 people but it has been struggling due to mismanagement.
The move will involve rooting out “sugar brokers” who have made the prices of sugar from the company uncompetitive. 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 factory. The restructuring is scheduled to start once the board has informed shareholders of an Annual General Meeting (AGM) and appointment of the audit firm.
As a result, the government will release KES1bn 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. Members of the board have been requested to either resign voluntarily for failing the company or they will be sacked.
The decision came after farmers held violent demonstrations in an attempt to evict the management, whom they accused of failing to pay them for delivery of cane. The firm blames low sugar production, illegal sugar imports, high production costs, and low prices contributing to half year loss.