Karuturi farm’s liquidation battle set to take longer

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A woman picking flowers at a flower farm, Naivasha. Photo/HARRIET JAMES
Media Max | May 23, 2018

Karuturi farm’s liquidation battle set to take longer

Kirera Mwiti

The battle surrounding the debt-ridden Karuturi flower farm in Naivasha continued yesterday with the Court of Appeal stopping the planned sale of its assets.

Justice Francis Tuiyott stopped CFC Stanbic Bank from moving ahead to dispose of some of the farm’s assets until June 14 when the case will come up for hearing.

This came a month after the bank, which has appointed a liquidation manager, listed assets to be sold to recover the debt that the once leading rose producer owes it. Justice Tuiyott, however, directed that the process of evaluation of expression of interest by the bank could continue.

“No sale of the assets shall be concluded until June 14 when all the parties shall appear before this court,” reads the ruling in part.

In the paid advert, the receiver managers detailed the items for sale but also indicated that the close to 125 hectares where the company sits would not be sold.

“The joint receiver managers of Karuturi Limited offer for sale all assets of the company situated along Moi South Lake Road in Naivasha”, read the notice in part.

Some of the items put for sale include all the greenhouse support structures and irrigation machines covering the whole area previously occupied by rose plantations.

Others are fumigation machines, pumps and assorted equipment worth millions of shillings that were being used during the company’s “rosy” days.

The farm’s Executive director Yeshoda Karuturi had in a statement accused the bank of irregularly demanding $24 million (Sh2.43 billion) from the farm which amounted to 600 per cent of the loan advanced.

“Karuturi has made public intent to repay CFC’s original debt of $4.04 million (Sh408.24 million) plus interest of up to 100 per cent of principal,” she said.

Yeshoda said the receiver managers had advertised for the sale of the assets notwithstanding an appeal against the decision of the High Court made on January 19.

“We have sought a stay of execution and enforcement of the aforesaid decision pending hearing and determination before the Honourable Court,” she said.

More than 3,000 former workers of the troubled Karuturi flower farm were surprised to learn of the sale of the firm’s property in the media. Kenya Plantations and Agriculture Workers Union raised  the alarm over the fate of the workers.

The union’s Naivasha branch secretary general Ferdinand Juma said they were in the dark over the sale of the assets, adding that they were keen to make sure that the workers received their benefits.

He said they were concerned over the plight of workers who had been living in deplorable conditions ever since they were laid off after the company went under.

“They were promised all will be well and were to be paid their dues and savings but we do not know what happens next,” said Juma.

He said last month the farm’s Indian owner Ram Karuturi visited the area and assured the workers he was doing everything possible to get back his farm and start operations.

“He attended a meeting with the workers and expressed confidence that the steps he was taking were geared towards the revival of the farm,” Juma added.

Karuturi, one of the world’s top growers of roses exporting more than a million stems annually, was put under receivership in 2014 after failing to service a Sh383 million loan borrowed from CfC Stanbic.

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.

Kenya is the lead exporter of rose cut flowers to the European Union (EU) with a market share of 38 per cent. Approximately 50 per cent of exported flowers are sold through the Dutch Auctions, although direct sales are growing.

In the UK, supermarkets are the main outlets. More than 25 per cent of exported flowers are delivered directly to these multiples, providing an opportunity for value addition at source through sleeving, labelling and bouquet production. Kenya flowers are sold in more than 60 countries.

It is estimated that in Kenya, more than 500,000 people, including more than 100,000 flower farm employees depend on the floriculture industry impacting over two million livelihoods.

The main production areas are around Lake Naivasha, Mt. Kenya, Nairobi, Thika, Kiambu, Athi River, Kitale and Nakuru,.
Original source: Media Max
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