French financier Proparco and pan-African banking conglomerate Ecobank Group have seized the prime assets of Mumias Sugar Company from the Kenya-based KCB Group.
The move by the leading pan-African lender and the French development financier comes nearly two months after findings revealed that Kenyan businessman Julius Mwale might select the Indian engineering consultancy firm, J.P Mukherji & Associates (JPMA) to run Mumias Sugar, should his company win the bid to control and revive the sugar business.
Information gathered by Billionaires.Africa revealed that Ecobank disclosed in a notice sent to the attorney-general on Nov. 29 that it had hired Harveen Gadhoke as its receiver manager in the forcible takeover of Mumias Sugar’s ethanol plant.
In a similar manner, Proparco filed a notice on the same date, claiming the rights to the sugar miller’s power generation plant.
The recent action by the lenders could truncate the future operations of the financially distressed sugar company and terminate the planned leasing of its assets to investors who offered millions of dollars to revive the ailing business.
Ecobank and Proparco backed their legal actions, stating that they lent Mumias Sugar Ksh2 billion ($17.6 million) and Ksh1.9 billion ($16.7 million) for its ethanol plant and its power generation plant, respectively.
The legal actions will impact the tender issued by KCB, as the Kenyan bank was directed to involve and seek the approval of other creditors, including Ecobank and Proparco, on Mumias’ operations.
Recall that earlier this year, Mwale placed the highest bid amounting to Ksh27.6 billion ($249.31 million) in a leasing tender to control and revive Mumias Sugar over a 25-year period.
The bid put him ahead of Kenyan businessmen such as steel tycoon Narendra Raval and Rai Group Chairman Jaswant Rai, who contested in the leasing tender to control and revive the financially distressed sugar company.
In an effort to restore activity in Kenya’s sugar value chain, Mwale offered Ksh2.2 billion ($20 million) to bring back sugarcane farmers and jumpstart sugarcane cultivation and sugar production.
Mumias Sugar, a Kenya-based integrated sugar company founded in 1971, was once the largest sugar manufacturer in Kenya, producing as much as 250,000 metric tonnes of sugar per annum.
In 2012, the company ran into a financial crisis after a forensic audit conducted by KPMG revealed procedural and financial irregularities in its books, leading to a loss of millions of dollars.
Following the management’s misappropriation of the company’s books, it was suspended from the Nairobi bourse, and subsequently placed under receivership on Sept. 24, 2019 in an effort to revive its operations and protect its assets.
