KCB and Absa Bank are currently in a contentious battle for control of Savannah Cement, a company that entered administration after defaulting on loans exceeding Sh14 billion. The dispute is now before the High Court, where Absa is seeking to remove the two receiver managers appointed by KCB, PVR Rao and PS Rao, from overseeing the administration process.
Absa has appointed Peter Kahi as the administrator and is requesting the court to block KCB’s receiver managers from interfering with Kahi’s control of Savannah Cement’s assets. The bank also seeks protection from the Athi River police to enforce this order and ensure a smooth administration process.
The financial stakes are high, with KCB owed Sh8.89 billion and Absa holding a Sh5.23 billion exposure, including a dollar portion of $16.45 million. Absa’s application argues that KCB’s actions are intended to obstruct the administrator’s efforts and hinder the implementation of a statement of proposals from a creditors’ meeting held on April 17, 2017.
Absa’s lawyer, Peter Wawire, alleges that KCB’s receiver managers have obstructed the administrator’s access, resulting in significant damage to the company’s assets and instances of violence against the administrator’s staff. These actions are claimed to be in contempt of the court and aimed at frustrating the administration process.
KCB is accused of appointing the receiver managers in violation of the Insolvency Act, as their appointment was contested while Savannah Cement was under administration. Absa maintains that Kahi has been fulfilling his duties lawfully and that the proposed turnaround plan for the company, outlined in the statement of proposals, is critical for addressing the firm’s financial difficulties.
According to Kahi’s report, Savannah Cement has been unprofitable for five consecutive years, with current debts totaling about Sh18 billion. The administrator notes that any potential turnaround would require significant time and resources, potentially spanning over a decade, with no assurance that it would benefit creditors.
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