Mumias, govt in talks for new bailout plan

Sugar miller Mumias is in talks with the government for a further injection of Sh2 billion in capital.

This comes barely seven months after the government in June 2015 released Sh1 billion to bail out the ailing miller.

In 2015 the money was used to pay off the debt it had to farmers as well refurbish the ageing sugar mill.

In a statement, Mumias Chairman said the company’s turnaround program was still on course but required more funds.

Among the other medium and long-term strategies Mumias is looking at are restructuring of existing long-term loans involving rescheduling of repayments to seven years, inclusive of a two-year moratorium.

Mumias needs an estimated Sh6.2 billion shillings to turn its fortunes around. Talks of a rights issue have been put on hold as shareholders and the government look to other sources of financing for the company.

The chairman made the revelation as Mumias fell further into loss announcing a net loss of Sh1.5 billion from Sh1.45 billion in the six months to December 2015.

The half-year loss was driven by the miller’s high financing costs that rose from Sh378 million to Sh732.6 million during the six-month period.

“During the six month period, high interest rates coupled with a depreciating shilling adversely affected the company in terms of high cost of finance and foreign currency exchange losses,” Mr Ameyo said.

Despite the loss there was an upside to Mumias’ performance with revenue growing to Sh2.9 billion from Sh2.6 billion during a similar period in 2014.

Mumias increased its sugar production by 11 percent, crushing 581,541 tons of cane and managing to sell 36,333 tons of it during the six months.

Revenue from ethanol also increased to Sh435 million. The sugar miller however registered a decline in sales of water, which dropped 37 percent to Sh8.6 million.

The miller was also unable to register any sale from its energy business following a dispute with Kenya Power.

“There have been no exports to the national grid since December 2014, hence no power export revenue earned since that time,” Mr Ameyo said.

Going forward, Mumias is looking to control its operating costs as well as streamlining the organisation to have in place a lean and efficient structure.

In July, Mumias hired Australian Errol Johnston as its CEO to drive the turnaround program.

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Mumias Sugar sugar millers

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