First financial report on sugar mills sale out Tuesday
Privatisation Commission chief executive Joseph Koskey. FILE PHOTO | NMG
The Privatisation Commission says the first of a series of reports on financial health of five State-owned sugar companies planned for sale will be out Tuesday next week.
The commission in a statement yesterday said a transaction advisor, who it says has been on ground, will be guiding the process that has already missed a 120 day deadline set by the Council of Governors and Agriculture ministry.
It says the inception report will capture details including summary of financials for the companies in the last five years, Acts governing their operations, shareholding structures as well as capacity and condition of the millers.
“The process is ongoing and we are expecting the transaction advisor to submit the inception report on Tuesday next week after being on the ground conducting due diligence work,” said commission chief executive Joseph Koskey in the statement.
“(They) will be required to update due diligence work that will include reviewing the financial, commercial, operational, technical and legal performance of the companies,” he said.
“They are also expected to prepare projections necessary for the financial valuation of each of the five sugar mills namely South Nyanza, Nzoia, Chemelil and Muhoroni and Miwani.”
Plans to sell the loss making millers has been in the cards for years and in October 2015 the government announced it had written off Sh39.7 billion owed by the companies, aiming to ease their planned privatisation.
The five companies are in need of modernisation to survive competition from the entry of other sugar producers and an impending end to sugar import quotas from the Common Market for Eastern and Southern Africa (Comesa) trade bloc.
The firms have been operating on and off this year.
Mr Koskey noted in the statement the advisors will be expected to produce other reports including an “information memorandum, asset valuation report and a report highlighting the implementation of the privatisation strategy and method.” “Once approved, the commission will then embark on the implementation phase that will set the stage for re-advertisement of requests for Expression of Interest (EOIs), shortlisting of the pre-qualified firms, invitation of bids and ultimately announcing the strategic partners to whom 51 percent of shareholding in each of the five sugar companies will be transferred,” said Mr Koskey.
