The owners of flower farm Karuturi Limited have secured an investor to inject funds into the business as they fight to save their prized asset from being auctioned by Stanbic Bank #ticker:CFC over a Sh1.8 billion loan default.
Karuturi, which was prior to its collapse Kenya’s biggest flower exporter, in a statement yesterday said that it has reached an agreement with Phoenix Group for a “blend of debt and equity” that will help it to meet its current debt obligations and restart its operations. The firm has been under receivership for the past four years.
The statement did not however indicate the value of the expected investment.
Phoenix Group is said to be worth Sh200 billion. The Singaporean company is among the world’s leading rice producers.
The firm says it has operations in 22 countries including Ukraine, Kazakhstan, Uganda and Benin, and is now eyeing entry into the lucrative flower business in Kenya.
The High Court in early March gave Stanbic the greenlight to auction the Karuturi’s assets should its owners fail to settle the debt within 90 days.
“The investment comprising of a blend of debt and equity is expected to help Karuturi meet its current debt obligations and leapfrog it towards restarting its operations following the conclusion of a 4-year receivership period in Kenya,” said the firm in the statement.
Karuturi Global’s CEO, Ram Karuturi, in the statement said the new arrangement will help it settle the debt as directed by the High Court.
The judge had in his ruling observed that the owners — Surya Holdings Limited and RHEA Holdings Limited — had admitted the pre-receivership debt and the post-receiver debt had been assessed by an audit firm selected by the owners themselves.
The judge directed the firm to settle Sh410 million pre-receivership loan in 60 days.
He further directed the owners to settle Sh640 million the company owes creditors other than the bank and Sh680 million advanced to the firm by the bank after it was placed under receivership.
Karuturi Ltd, one of the world’s top growers of roses exporting more than one million stems annually, was put under receivership in 2014 after failing to service a Sh383 million loan from CfC Stanbic bank.
Before it sunk into receivership, the Naivasha farm was estimated to produce over 330 million roses annually for export to Europe accounting for about 10 per cent of Kenya’s cut flower exports.