Hopes for the recovery of the collapsed sugar miller Mumias Sugar Company and fashion retailer Deacons East Africa are hanging by a thread after the Capital Markets Authority suspended their trading on the Nairobi Securities Exchange (NSE) indefinitely, and put them on the delisting watchlist.
While Kenya’s Insolvency Act gives troubled firms opportunities to seek fresh options for recovery with liquidation being the last resort, The EastAfrican has learnt that the regulators’ latest action signals that the troubles afflicting the two firms are far from over.
“The extension of suspension from trading of the company’s shares will remain in force until further notice,” NSE said in a statement last week, adding that, “all shareholders, investors and the public are advised to take note of the delisting.”
On September 24, 2019, Mumias, the region’s largest miller, was pushed into administration for failing to pay off debts it owes banks amounting to close to Ksh12.5 billion ($125 million).
KCB announced that the sugar miller had been placed under receivership to protect its assets and to the best extent maintain its operations, with Ponangilpalli Venkata Rao as the receiver manager.
As a result, the trading of the Mumias stock on the NSE was suspended for three months.
The stock trading suspension was extended by three months until March this year (2020) with effect from December 27, 2019.
Mumias is 20 per cent owned by the state.
On the other hand, Deacons (East Africa) Plc. was placed in administration following the appointment of Joint Administrators by the Board of Deacons (EA) Plc to run its business in accordance with the Insolvency Act of 2015 on November 19, 2018.
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As a result, the firm’s stock on the NSE was suspended from the Nairobi bourse for 40 days on November 19, 2018 after it went into administration, which was further extended for 10 days to January 31 2019.
CMA then extended the freeze on trade in the fashion retailer’s shares for a further 10 months from February 1, 2019 after the firm’s joint administrators Peter Kahi and Atul Shah of PKF Consulting on January 22 2019 reached an agreement with shareholders and creditors to allow them more time to identify a strategic or a financial investor to recapitalise the heavily indebted clothes vendor.
Deacons struggled to recover following loss of key franchises like Woolworths and Mr. Price amid piling debts. Deacons listed by way of introduction on the alternative investment segment of the NSE in August 2016.
The firm listed 124 million shares with hopes of giving shareholders a chance to trade and discover the value of the clothing company.
