Govt says reaches 5 bln shilling deal with lenders for Mumias
09 March 2015, 08:44
Nairobi - The government said it has reached a 5 billion shilling ($54.9 million) deal with banks in a plan to revamp cash-strapped Mumias Sugar that involves slashing 300 jobs and halving its board of directors.
The cash is meant to help turn around struggling Mumias, whose sugar output accounts for close to a third ofKenya's annual sugar production. The state injected 500 million into the company in January as part of a rescue plan.
Mumias said on Thursday its loss widened to 2.08 billion shillings in the six months to end-December from a restated loss of 407.4 million shilling loss a year earlier, blaming the poor performance to an unscheduled shutdown of its factory in western Kenya as well as poor prices.
Audit firm KPMG will supervise loss-making Mumias' restructuring ahead of a rights issue meant to raise 4 billion shillings, Deputy President William Ruto said in a statement.
The statement did not say who the commercial lenders were, or when the rights issue would take place.
The first 1 billion shillings of the cash injection will be released within a week, he said.
“We have to take these measures so that farmers in the region can be paid for delivery of sugarcane,” Ruto said.
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