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Milling Corporation of Kenya faces auction over Sh731 million debt

RIFT VALLEY
By Daniel Chege | August 13th 2021

 

The Milling Corporation industrial property of Kenya on August 12, 2021, at Nakuru Industrial area. [Daniel Chege, Standard]

The Milling Corporation of Kenya Limited has been put on auction over a Sh731-million debt owed to Standard Chartered Bank. The industrial property dealing with the production of maize meal and animal feeds measures 8.64 acres and is located at the industrial area of Nakuru town.

Garam Investments Auctioneers started the public auction yesterday outside the bank located along Kenyatta Avenue Nakuru at around 12 noon.  According to the auctioneer’s notice seen by The Standard, interested buyers must deposit 10 per cent of the amount in cash or cheque, at the fall of the hammer.

The balance will be payable within 90 days to the bank’s advocate.

“A bidding deposit of Sh5 million by way of banker’s cheque will be mandatory,” reads the notice.

Failure to pay the balance by the confirmed purchaser will result in forfeiture of all deposits paid.

The auction came after the corporation lost a civil suit against the bank with the Nakuru High Court declining to stop the impending auction on February 25, 2021.

Justice Janet Mulwa in her ruling also set aside interim orders of injunction issued on May 17, 2020, temporarily stopping the bank from selling the property.

“The plaintiff has failed to prove that it will suffer prejudice if the property is auctioned. Furthermore, the bank is capable of compensating the plaintiff in damages,” she ruled

The corporation had used the property as security for a Sh2.2 billion loan it took between 2010 and 2015.

It managed to pay Sh1,488,400,000 of the loan but defaulted on the balance of Sh731,906,759, which is unpaid to date.

As at February, the debts, interest and recovery charges accumulation stood at Sh839,895,114.

The corporation had argued that the bank refused to consider its proposal to settle the debt in a manner that would be advantageous to both parties.

It also averred that the bank was determined to dispose of the land without considering reasonable offers from it and its investors including a Sh1.02 billion offer from an investor.

“The bank forced a sale valuation of Sh696,539,475 in 2019 which is lower than a forced value of Sh711,600,000 done in 2017 bearing in mind land appreciates,” read the application.

The bank defended the auction saying that the industry had no compelling reasons to stop the auction.

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