Mumias Directors, Staff Sent Home To Save Miller
This is after the Government on Friday entered into a Ksh 5 billion business agreement with lenders to revive the sugar industry giant.
The turn around will involve weeding out “sugar brokers” who have made the prices of sugar from the company uncompetitive as well as retrenchment of about 300 members of staff.
The deal, hammered in a meeting chaired by Deputy President William Ruto in his office, will see more than 50 per cent of the board sent home and change in the entire management.
Audit firm KPMG will be appointed to oversee the restructuring that will see a rights issue which is expected to inject Ksh 4 billion to the ailing factory.
Ruto announced the measures after chairing a meeting attended by National Treasury Principal Secretary Kamau Thuge, Mumias Board chairman Dan Ameyo, Chief Executive Officer Coutts Otolo and representatives of creditors.
OUTSTANDING FARMERS ARREARS
“We have to take these measures so that farmers in the region can be paid for delivery of sugarcane,” said the Deputy President.
The restructuring starts in earnest with the board directed to notify shareholders of an Annual General Meeting and appointment of the audit firm.
Ruto said the Government will release Ksh 1 billion 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.
However, he requested members of the board to voluntarily resign for failing the company or they will be phased out.
The decision was reached after month-long consultations among the lenders, the board, management, and the Government.
The decision came just a day after farmers held violent demonstrations in an attempt to evict the management, whom they accused of failing to pay them for delivery of cane.
Ruto said the sugar company has to provide farm inputs at the right price and also sell its sugar at a competitive price.
Mumias Sugar Company’s current status is attributed to a string of mismanagement.
The announcement of the bailout came on a day that the sugar company said its loss widened to Sh 2.08 billion from a restated loss of Sh 407.4 million last year.
The firm, whose sugar output accounts for about a third of Kenya's annual sugar output, said net revenues for the period to end December fell 62 percent to Ksh 2.67 billion.
The company said the loss was largely due to an unscheduled and out of crop maintenance of its factory due to cane shortage.
"The revenues were impacted by the production time lost during the two and a half months maintenance shutdown as well as cane shortage and a lower average net cane price per tonne of sugar realised during the first quarter," they said.
"Despite the challenges,the company looks forward to better performance in the second half of the year following successful resumption of production."
Low sugar production, high production costs and low prices resulting from illegal sugar imports further compounded the company's half year, the firm said.
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