Karuturi debts now grow to Sh560m after failed buyout
Ian Small, one of the receiver managers at Karuturi Flower farm. The firm has accused Mr Small and counterpart Kieran Day of mismanagement. PHOTO | FILE | NATION MEDIA GROUP
What you need to know:
The flower producer was placed under receivership by CFC Stanbic in February after defaulting on a $4 million (Sh360 million) loan, sparking a row that ended up in court.
Karuturi flower farm’s woes have deepened with its indebtedness to CFC Stanbic increasing to $6.3 million (Sh560 million) after the company failed to secure a buyout last month that would have helped it settle the outstanding loan.
The flower producer was placed under receivership by CFC Stanbic in February after defaulting on a $4 million (Sh360 million) loan, sparking a row that ended up in court. International firms Bell House Capital International, Bhama Consulting of SSG Capital Hong Kong and Axis Bank Limited failed to acquire Karuturi last month, scuttling the firm’s plans of resolving its insolvency.
Growth of the debt was revealed in court pleadings by Karuturi’s chief financial officer Pranab Ghosh, who said the company updated its level of indebtedness as of last month. Karuturi insists that this is a major contradiction to a March statement by receiver managers Ian Small and Kieran Day that the firm had taken a turn for the better.
The revelation was in a bid to prove to High Court judge Francis Gikonyo that the receiver managers are deliberately mismanaging the firm and that they intend to sell the company’s assets.
“It has come to our notice that the receivers have embarked on a well-choreographed plan to clog Karuturi’s equity of redemption for ulterior motives,” said Mr Ghosh.
“Ian Small and Kieran Day are creating an environment that would permit them to outwit this court. They are hell bent on running Karuturi into the ground by selling off its assets instead of competently managing the business.”
Karuturi insists that the 850,000 stems the farm is producing daily are enough to pay off a significant part of the money owed to the bank, which is evidence that there is foul play in the disclosed outstanding debt.
Mr Ghosh says the receivers have facilitated visits to its Naivasha farms by rival VD Berg from the Netherlands, sparking fears of the firm’s liquidation. “On October 9, officials from CFC Stanbic took visitors to Karuturi’s farms in the company of one Gerrit Burnhoon from the neighbouring farm, VD Berg,” said Mr Ghosh.
Karuturi says it wants to ensure its financial statements are in order in the event that alternative firms are interested in rescuing it.
The original suitors had asked the flower firm to supply financial records to verify if it was compliant with necessary authorities, but Karuturi failed to get the documents from the receiver managers.
Karuturi said CFC is acting in bad faith despite directions from Justice Gikonyo that the parties negotiate for a possible out-of-court settlement.
