Latest reports indicate that Subati Group has acquired six parcels of land in the Nyandarua/Ol Joro Orok area and the crop of flowers thereon from Suera for an undisclosed sum.
The information is contained in a Kenya Gazette notice published by lawyers representing Suera and Subati.
The notice says Subati, which is owned by businessman Ravi Patel and Naren Patel, will continue the business of the newly-acquired properties (flower farming).
Former Co-operative Bank managing director Erastus Mureithi’s Suera Flowers has been sold to rival Subati Group, marking the beginning of asset disposals aimed at settling the businessman’s Sh1.6 billion debt.
Latest reports indicate that Subati Group has acquired six parcels of land in the Nyandarua/Ol Joro Orok area and the crop of flowers thereon from Suera for an undisclosed sum.
The information is contained in a Kenya Gazette notice published by lawyers representing Suera and Subati.
“Notice is given under the transfer of Business Act, that Suera Flowers Limited (the transferor), has pursuant to an agreement for sale dated August 31, 2018 sold properties … together with the assets thereon which include the crop of flowers to Subati Group Limited,” the lawyers said.
The title numbers of the properties are given as 8421, 8420, 12, 1489, 1225, 11994.
The notice says Subati, which is owned by businessman Ravi Patel and Naren Patel, will continue the business of the newly-acquired properties (flower farming).
Mr Mureithi told the Business Daily that Suera is not being sold in its entirety, adding that the company will retain part of its operations. He, however, declined to reveal the price at which the six properties were sold and the size of the operation Suera will retain.
The latest transactions effectively expand the business of Subati, which is one of the largest flower growers and exporters in Kenya. The company grows rose flowers on some 80 acres in Nakuru and Naivasha, producing 750,000 stems of 12 different varieties per month.
Subati exports its flowers to more than 40 countries in Eastern Europe, the Middle East and Australia. Besides Subati, other major players in the industry include Oserian, Fontana and Kisima.
Sources told the Business Daily that the sector now favours the big companies that are able to achieve economies of scale at a time when costs are rising.
Smaller firms, in particular, are feeling the pinch of increased competition from countries like Zimbabwe and Ethiopia, which subsidise their farmers. The sale of Suera properties was spearheaded by Garam Investments Auctioneers, who were hired by a local bank that is also disposing of Mr Mureithi’s other properties, including residential houses, office buildings, greenhouses with horticultural crops, water pans and cold rooms. It was not immediately clear how far the asset disposals have gone.
Mr Mureithi’s eight units of four-bedroom houses in Nairobi’s upmarket Karen estate were also put up for sale in a past notice and were expected to fetch some Sh960 million.
An 89-acre prime agricultural land on the Nyahururu-Ol Kalou Road was to be sold for Sh393 million. Most of the assets are in Nyahururu.
Mr Mureithi jointly owns the flower firm with his wife Susan.
The businessman, who quit employment as Co-op Bank’s chief executive in 2001, has in the past fought a legal battle with Kenya Revenue Authority (KRA), which demanded Sh25 million in a claim that related to his job at the bank.
The taxman had raised issues with the bank’s calculation of taxes on benefits Mr Mureithi enjoyed such as motor vehicle allowances, insurance premiums, fees and air fares to the UK and the US as well as security guard services at his home.
Trouble deepened in March 2003 when his former employer, Co-op Bank, sued him after settling his tax liabilities. The bank argued that it was Mr Mureithi’s responsibility to ensure his personal tax compliance and not the company.
Mr Mureithi joins a growing list of businessmen who have lost the empires they built on debt. Several banks, for instance, have auctioned companies of the late businessman Twahir Sheikh Said (TSS) to recover their loans estimated at more than Sh3 billion.
Nakumatt Holdings, founded by Atul Shah, went into administration after defaulting on more than Sh20 billion of bank and supplier debt.
Besides unique challenges facing individual companies, the rise in bank-mandated auctions has been attributed to a tough business environment including difficulty in refinancing old loans.
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