The government, which owns a 20 percent stake in Mumias, has offered the firm Sh3.5 billion in bailout funds over the last five years, but which achieved little.
MSC is technically insolvent to the tune of Sh6 billion after sinking further into losses that have seen its total liabilities surpass total assets.
The firm’s losses in the year ending June 2018 rose to Sh15.1 billion from Sh6.8 billion the previous period. It is yet to release the 2019 results.
Mumias Sugar Company (MSC) requires at least Sh5 billion for a smooth operational take-off, a task force has said.
The Kakamega county government team on the revival of the miller says the board is inept and wants a court appointed administrator to take over.
The administrator will be answerable to creditors, shareholders, and report to court.
In its report, which was presented to Governor Wycliffe Oparanya, the task force has proposed that the national government should identify and negotiate with an investor who can release the funds at once to jumpstart revival plans.
However, such an investor should not be Asian.
“The funds should go towards the maintenance of the factory, setting up a revolving fund for direct purchase of sugarcane through willing buyer willing seller arrangement, rehabilitation of the nucleus estate, purchase of molasses for ethanol production and revitalisation of the out growers section,” the task force says in its report.
To achieve this, the team wants the national government to negotiate with the miller’s creditors to defer debt repayment for at least three years, or such debt converted into equity.
The task force was established by Oparanya and was mandated to work with the board and management of Mumias Sugar to map out and recommend strategies its revival.
It recommends that the county should be involved in the management of the miller for it to be successful.
“The county government should negotiate with national government to own shares that enable it to have a representation on the board,” it states, proposing a five per cent stake.
The task force has recommended that the county government should find an entry point by negotiating with the national government to get part of the 20 percent slice.