Chemical maker Bio-Corn Products Limited will lose its multimillion shilling Eldoret plant just two years after it began commercial production after it defaulted on a loan owed to a local lender.
In a notice in the dailies last week, Dalali Auctioneers sought to sale the firm’s 15-acre property that is located within an export processing zone (EPZ) in Eldoret.
“Under instruction received form the charges we shall sell by public auction the undermentioned property on Friday, November 22, 2019, at the office of Joyland Auctioneers,” read part of the notice.
The property hosts a double-storey office block, power stations, two blocks of godowns under construction, a waste treatment plant as well as radiation and storage rooms. The auctioneers declined to disclose the value of the loan when reached for comment.
Bio-Corn Products, a subsidiary of the Nairobi-based manufacturing firm ISONS Group, opened the Eldoret plant in August 2017. It uses maize cobs to produce various chemicals for industrial use. It was expected to be a major boost to local maize farmers who often throw away the cobs as waste.
The plant manufactures furfural, which is used as a solvent in the refining of lubrication oils, pharmaceuticals, cosmetics, resins and plastics.
Its estimated annual production is 5,000 tonnes of furfural in addition to 2,500 tonnes of acetic acid and 400 tonnes of formic acid. Bio-Corn’s struggles to repay the loan come at a time when a tough economic environment has seen companies shut down, default on loans and lay off staff underlining their distress. Newspapers have in recent months been replete with advertisements of vehicles and other properties put up for auction by banks as businesses and individuals struggle to service loans.
The lenders rely on collateral to mitigate credit risk. They also rely on a panel that undertakes the valuation of property and other assets used as collateral.
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