Kenya: logistics company riddled with debt, several carriers consider liquidation
For the second time in two years, one of Africa’s largest logistics companies is dying as it slips into administration after defaulting on bank loans.
NCBA bank, associated with the Kenyatta family, revealed on Thursday that it had placed Multiple Hauliers under administration on June 7, indicating that the company is unable to repay a loan in an undisclosed amount.
Senior Ernst & Young managers Anthony Makenzi Muthusi and Julius Mumo Ngonga have taken control and management of Multiple Hauliers. They should analyze the logistics giant’s activities to determine a way forward.
Through Ernst & Young, the NCBA urged creditors to declare their debts and provide proof to Messrs. Muthusi and Ngonga, who will then determine if Multiple Hauliers can be rescued.
If directors find that the company cannot be pulled out of its 14 billion shilling debt hole, one of Kenya’s oldest carriers will be sent to the grave as creditors fight to reduce their debts.
“The powers of the directors extend to all the assets and businesses of the company. Under the administration, the powers of the directors to manage the assets of the company have ceased,” said Mr. Muthusi and Mr. Ngonga in the notice.
“The directors have taken control of the business assets and management affairs of the company without personal liability.”
While the rescue or collapse of Multiple Hauliers depends entirely on its asset-to-liability ratio, it should worry the company that administration and receivership have not yielded the best results for some of the largest companies in the world. Kenya in the recent past.
Placed under receivership
Retail chain Nakumatt, construction experts Spencon, flower company Karuturi and cement company ARM have all fallen after being placed in receivership or receivership.
Logistics companies like Multiple Hauliers have seen significantly lower revenues since 2019, when the government launched the cargo wing of its Standard Gauge Railway (SGR) business.
The financial troubles of several carriers began before SGR began operations, but the railroad swallowed up many deals that could have helped the transportation company generate much needed revenue.
Court documents indicate that Multiple Hauliers attempted to borrow 10.8 billion shillings from a consortium of banks in 2017, including, interestingly, NIC Bank.
Two years after the loan agreement failed, NIC merged with family-owned commercial bank CBA Kenyatta to become NCBA Bank.
Other lenders in the 2017 consortium were Standard Bank of South Africa and its Kenyan subsidiary Stanbic Bank.
A second loan that Multiple Hauliers took from Mauritius private equity firm Barak Fund was used to repay part of the carrier’s local loans.
The Barak fund disbursed 4.8 billion shillings to the carrier, which paid 447 million shillings to the Prime Bank, leaving a balance of more than 360 million shillings.
In March, Prime Bank attempted to sell the Mombasa yard from Multiple Hauliers after the carrier failed to pay off its loan balance.
Several carriers sued the lender, arguing that the Mombasa land had guaranteed only 447 million shillings of loans which were repaid by financing from the Barak Fund.
But Prime Bank argues that Multiple Hauliers used the land to cover any loan it had from the lender.
Two weeks ago, Judge Alfred Mabeya stopped Prime Bank from selling the land until he decided on the lawsuit.
In September, Multiple Hauliers is expected to present a detailed report on its finances to another judge – David Majanja – who will then decide whether or not to continue hearing an insolvency claim filed by Synergy Industrial Credit following a default. payment of 532 million shillings.
Synergy filed the petition last year, but Judge Majanja granted a 12-month stay of proceedings to allow Multiple Hauliers to get its financial affairs in order.
Some of the creditors who joined the insolvency petition were Mumbua Mutuku, Laura Jean Sylvester, Galana Oil Kenya, Barbara Jane Belcher, Dry Associates and Andrew Ian Moore Gordon.
The others are Victoria Wambui Kagunya, Robert James Scott Gordon, Zahra Mohamed Haji Gordon, Margarethe Gordon, National Social Security Fund (NSSF), Weldcut Africa Limited, Hardev Kaur Dhanoa and I&M Bank.