The Capital Markets Authority (CMA) has warned against the planned takeover of troubled Mumias Sugar Company by the Kakamega County Government.
Chief executive Paul Muthaura, in a letter addressed to Governor Wycliffe Oparanya, urged caution, saying media reports indicating that the county is planning to take over the firm’s management are creating uncertainty.
Mr Oparanya had said the county government would take over operations of the factory and had named a 12-member committee and mandated it to oversee the management of the company’s nucleus estate farms, safeguard its assets and map out a revival plan.
“Kindly further note that MSCL, being a listed company, is governed by the Capital Markets (Securities) (Public Offers Listing and Disclosures) Regulations 2002 (as amended). In this regard any decision to change directors of MSCL can only be made through resolution of the shareholders passed in a properly constituted AGM,” Mr Muthaura said in his letter.
The letter is copied to National Treasury Kamau Principal Secretary Thugge and Mumias board of directors chairman Kennedy Ngumbau.
“Whereas the authority understands the concerns expressed for the county stakeholders that rely on MSCL, it is important that there is full adherence to the laws of Kenya and specifically the Capital Markets Act,” Mr Muthaura said.
Meanwhile, the management of the debt-ridden firm is grappling with a fresh headache after power supply was disconnected over a Sh1.18 billion debt.
A Kenya Power official said the miller had initially reached an agreement with the power utility firm to make payment of Sh4 million monthly.
“If the miller is able to raise Sh4 million, power supply will be restored to the factory because we would like to see Mumias up and running,” he said.
The payment deal was reached to enable the miller resume operations and generate revenue as part of a revival plan by the management.
The going has not been easy for the miller due to a crippling shortage of cane and financial woes that keep piling by the day, scuttling efforts being made to get the miller back on track.
Last week, the Kenya Revenue Authority (KRA) instructed banks to channel any money on the miller’s accounts to it in a bid to recover from the firm Sh10 billion in taxes.
Mr Eric Khalumi, the firm’s Head of Finance, confirmed that the miller has been unable to settle KRA arrears due to persisting woes.
“The effect of this is that all our operations have been crippled since banks have instructions to channel all the money on our accounts to KRA,” he said.
Earlier this year, the miller reached a deal with the tax collector to pay Sh10 million monthly to offset outstanding taxes, interest and penalties.
However, the miller has been unable to meet its part of the bargain, only managing to pay a paltry Sh4 million.
Mr Khalumi said management plans to meet KRA officials soon over the matter.
On Wednesday, acting chief executive Isaac Sheunda said they are discussing the issue with Kenya Power.
“We are confident that Kenya Power will restore supply in the next few days,” he said. The miller is currently using generators.