Mumias considers issuing bond to finance projects

By James Anyanzwa

Mumias Sugar Company (MSC) is reconsidering the possibility of issuing a bond to refinance its green energy projects and acquisition programmes.

Other projects expected to benefit from this funding include the Tana and Athi Rivers Development Authority (TARDA) project.

The latest comes after the sugar miller received an enhanced global credit rating from the Global Credit Rating Company (GCR).

The domestic Kenyan shillings long-term rating of A+ (single A plus) and a short term rating of A1 (Single A one) signals MSC’s high credit quality and certainty of timely payments to creditors.

"This rating is basically an indication of the solid financial strength and the investment status of the company," said Sam Omukoko, managing director, Metropol East Africa Ltd, local representative of GCR.

MSC Chief Executive Evans Kidero addresses journalists at the company’s offices in Nairobi. He is accompanied by Metropol East Africa Ltd Managing Director Sam Omukoko (second right), MSC chief finance officer Peter Kebati (right), and Metropol East Africa Ltd Executive Director James Murigu (left).

Consequently, the enhanced credit rating offers the Western Kenya based sugar miller expanded financing options in addition to equity and syndicated loans.

"Certainly, we want to do acquisitions and the funding will either be debt or equity. Most likely, it will be an element of share capital or a mix of bond and commercial paper for the long-term, depending with the rates," Mr Peter Kebati, the company’s chief finance officer told reporters at the company’s offices in Nairobi yesterday.

"We have a solid company which we will use to attract investors. In the long term, we shall be looking for additional funding for some of our projects, including TARDA and acquisitions."

Kebati said the new rating would help the company attract new investors (both local and foreign).

He said international investors mainly rely on credit ratings, which gives vital information about a country’s risk and sovereign risk factors, industry rating and the liquidity status of the individual company.

Dr Evans Kidero, MSC chief executive said the company would have to review the entire process of raising capital when the time is due.

Acquisition plans

"We have so many projects, which we are undertaking such as the co-generation plant, ethanol and the bottled water plants, but at the back of it, we have acquisition plans and green field projects. We will look at the whole process of raising new funds when the time comes," said Kidero

Kidero said plans by the company to acquire shareholding in some of the ailing sugar millers were still on course.

"We are aware that the Government is divesting from the five state-owned sugar millers. We believe the process is on and we are looking at that very keenly. We have the experience and the financial muscles required to run these firms."

He said the MSC board would be particularly interested in those companies that have technical and management alignment with MSC, including proximity and provision of raw materials.

The Government is seeking to offload 51 per cent in each of the five ailing sugar millers — Chemilil, Muhoroni, Miwani, Nzoia and Sony Sugar.