Debt-ridden logistics firm Multiple Hauliers stares at liquidation

For the second time in two years, one of Africa’s largest logistics firms is staring at death as it slides into administration after defaulting on bank loans.

The Kenyatta family-associated NCBA Bank on Thursday revealed that it placed Multiple Hauliers under administration on June 7, an indication that the company is unable to repay a loan of an undisclosed amount.

Ernst & Young seasoned managers Anthony Makenzi Muthusi and Julius Mumo Ngonga have assumed control and management of Multiple Hauliers. They are expected to analyse the logistics giant’s business to determine a way forward.

Through Ernst & Young, NCBA invited creditors to state their debts and furnish proof of them to Mr Muthusi and Mr Ngonga, who will then determine whether Multiple Hauliers can be rescued.

Should the administrators find that the company cannot be pulled out of its over Sh14 billion debt hole, one of Kenya’s oldest transporters will be sent to the grave as creditors fight to lower their liabilities.

“The powers of the administrators extend to all assets and undertakings of the company. By virtue of the administration, the powers of the directors in terms of dealing with the company assets have ceased,” Mr Muthusi and Mr Ngonga said in the notice. 

“The administrators have taken control over the business assets and management affairs of the company without personal liability.” 

While the rescue or collapse of Multiple Hauliers entirely depends on its assets-versus-liability ratio, it should worry the firm that administration and receivership have not borne the best results for some of Kenya’s biggest firms in the recent past.

Placed under receivership

Retail chain Nakumatt, construction experts Spencon, flower firm Karuturi and cement maker ARM all went down after being placed under administration or receivership.

Logistics firms like Multiple Hauliers have registered significantly lower revenues since 2019 when the government launched the cargo wing of its Standard Gauge Railway (SGR) business.

Multiple Hauliers’ financial problems started before SGR started operations, but the railway has gobbled up a lot of business that could have helped the transport company rake in much needed revenue.

Court papers indicate that Multiple Hauliers attempted to borrow Sh10.8 billion from a consortium of banks in 2017, including, interestingly, NIC Bank.

Two years after the loan deal collapsed, NIC merged with the Kenyatta family-owned CBA Commercial Bank to become NCBA Bank.

Other lenders in the 2017 consortium were South Africa’s Standard Bank and its Kenyan subsidiary Stanbic Bank.

A second loan Multiple Hauliers took from Mauritius-registered private equity firm Barak Fund was used to repay some of the transporter’s local loans.

Barak Fund disbursed Sh4.8 billion to the transporter, which paid Sh447 million to Prime Bank, leaving a balance of over Sh360 million.

Insolvency petition

In March, Prime Bank attempted to sell Multiple Hauliers’ Mombasa yard after the transporter failed to clear its loan balance.

Multiple Hauliers sued the lender, arguing that the Mombasa land only secured Sh447 million in loans that were paid off from the Barak Fund financing.

But Prime Bank argues that Multiple Hauliers had used the land to cover any loan it has with the lender.

Two weeks ago, Justice Alfred Mabeya stopped Prime Bank from selling the land until he determines the suit.

In September, Multiple Hauliers is expected to present a detailed report on its finances to another judge – David Majanja – who will then decide whether to proceed with hearing an insolvency petition filed by Synergy Industrial Credit following a Sh532 million loan default.

Synergy filed the petition last year, but Justice Majanja issued a 12-month suspension of proceedings to allow Multiple Hauliers a chance to put its financial affairs in order.

Some of the creditors that had joined the insolvency petition were Mumbua Mutuku, Laura Jean Sylvester, Galana Oil Kenya, Barbara Jane Belcher, Dry Associates and Andrew Ian Moore Gordon.

Others are Victoria Wambui Kagunya, Robert James Scott Gordon, Zahra Mohamed Haji Gordon, Margarethe Gordon, National Social Security Fund (NSSF), Weldcut Africa Limited, Hardev Kaur Dhanoa and I&M Bank.

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