Giant cereals manufacturer Proctor & Allan, which is linked to Kenyan billionaire businessmen including Ngugi Kiuna, has been placed under receivership over a Sh3.7 billion bank debt.
The High Court placed Proctor & Allan (EA) Limited under the receivership of Ponangipalli Venkata Ramana Rao and Swaroop Rao Ponangipalli effective February 24, 2025, after it failed to service a KCB Group loan estimated at Sh3.7 billion.
It joins an expanding list of firms that have borne the brunt of a tough economy.
A receivership is a court-appointed remedy that can assist creditors in recovering funds in default and help troubled companies avoid bankruptcy.
Having a receivership in place makes it easier for a lender to obtain the funds that are owed to them if a borrower defaults on a loan.
“Following the appointment, all the affairs and business of the company are being conducted by the receivers. The powers of the receivers extend to all assets and undertakings of the company. The powers of the directors in terms of dealing with the company’s affairs ceased,” the joint receivers said.
“Please note that under Section 35(1)(b) of the Companies Act, Cap 486(now repealed), the management and directors of the company are required to submit within 14 days from the date of being notified about the appointment of the receivers, a statement of the company’s affairs at the appointment of the receivers.”
The joint receivers said all claims against the company would be accepted before March 31, 2025.
“Any party having a claim against the company shall submit the claim in writing together with the relevant supporting documentation,” the receivers said.
Besides Mr Kiuna, other wealthy businessmen associated with Proctor & Allan are Edward Njoroge, the former KenGen CEO, and Zephania Mbugua, the former chairman of East African Cables.
The entrepreneurs were close allies of late President Mwai Kibaki.
Proctor & Allan, which operates from a main factory in the rural Limuru area of Kiambu County, is the maker of popular cereals products including cornflakes, oats, porridges, cake mixes, and unimix.
KCB Group financed the acquisition of Proctor & Allan’s manufacturing plant in Limuru in 2015 but the firm was unable to repay the loan amid struggles to raise working capital to run the plant.
The cereals manufacturer had dream expansion plans after it relocated its factory from Nairobi’s Lusaka Road but ran into headwinds amid competition from rivals and an economic downturn, which affected demand of its products.
The company, which services the Kenya market and also exports its products to the Common Market for Eastern and Southern Africa (Comesa) countries, was incorporated in 1999 after Proctor &Allan was acquired from Unga Group by a group of investors and Acacia Fund Limited.
Official records at the State’s Company Registry listed Mr Kiuna, Mr Njoroge, Mr Mbugua, and Kenneth Muchai Ikiara as the directors Proctor & Allan as of February 25, 2025.
It listed investment vehicles Karite Limited, Peri Investment Limited., Nerifa Holding Limited as owners with 11.33 percent, 11.85 percent and 76.82 percent stakes respectively.
The placement of Proctor & Allan under receivership piles pressure on Mr Ngugi who has recently encountered a raft of challenges with his business interests in top companies, including BOC Kenya where he is fighting to retain control.
Mr Ngugi, a former BOC Kenya chairman, raised his stake in the company by more than half in the nine months to December 2024 to hit a holding of 17.66 percent — a move that pushed him closer to a threshold needed to block a delisting in the event of a takeover.
The rise in Mr Ngugi’s stake in BOC Kenya came in the wake of a lost petition at the Capital Markets Tribunal in which he had sought to block a proposed sale of the company to rival listed gas maker Carbacid.
Proctor & Allan joins a growing list of firms that have recently either been placed under receivership or administration as the impact of a wobbly economy takes a toll.
Barely three weeks ago, Kenya’s oldest bus, coach, truck, and commercial body manufacturer, Labh Singh Harnam Singh Limited (LSHS), was placed under administration over a Sh1 billion bank debt.
The High Court placed LSHS under administration effective February 4, 2025, after the firm failed to service a Sh1.1billion loan by KCB Group and appointed Ponangipalli Venkata Ramana Rao and Swaroop Rao Ponangipalli as the joint administrators.
LSHS, which was established in 1950, had been servicing orders by brands sucha as Isuzu East Africa, Scania East Africa, DT Dobie, Hino Motors Kenya, Simba Colt Limited, King Long, and CMC Motors Group.
LSHS joined a record list of firms that had gone into administration in the year to June 2024, according to data from the Business Registration Service (BRS).
Among the firms that went into administration in the period was Mastermind Tobacco (K) Ltd over an undisclosed debt to I&M Bank.
Mastermind, which went into administration in December 2023, was at the time Kenya’s second-largest cigarette manufacturer.
Sendy Group, a technology-based logistics firm, was also placed under administration in September 2023 after defaulting on its debt.
Vehicle and Equipment Leasing Limited (Vaell) met a similar fate in February 2024 after defaulting on credit to the tune of Sh1.1 billion. In May 2024, e-commerce firm Copia was also placed under administration by its board of directors after failing to attract capital, even as its costs piled.
