Mumias Sugar has opened talks with local and international banks to help build a $400 million (Sh34.3 billion) factory in Tana Delta in August. The miller said it was targeting to complete the fundraising talks by June, but did not give details on how much it will raise internally. The Nairobi bourse listed, which has seen it share value drop by a quarter over the past six months to Sh3.25, is less keen on raising cash from shareholders via a rights issue. "We are seeking financiers and several investors have shown interest. We intend to finish this within the next six months," said Peter Kebati , Mumias Sugar CEO in an e-mail response. "Due to the quantum it may be necessary to have a consortium of both (local and international banks). The project may also be financed as a separate standalone entity which will rule out the rights issue option." The factory, which will be a joint venture with Tana/Athi River Authority (Tarda), is expected to boost the firm's sugar production which has fallen in recent years due to inadequate cane supplies. This has seen Mumias rely heavily on high sugar prices over the past decade to grow profit in a strategy that has come under pressure with the falling cost of the commodity and cane shortage. Mumias will take a 51 per cent stake while Tarda will own 49 per cent in the Tana factory, with some shares expected to be ceded to the local community who had raised concerns over the impact of the mega project on their livelihoods. The project has been in the pipeline for more than seven years, but Mr Kebati says that approvals have been met. "Delay was caused by external matters beyond our control. We hope to break ground by August 2014 ," he said. The plant is expected to be fed by sugarcane covering 16,000 hectares and it will crash 8,000 tonnes daily, produce 60,000 litres of ethanol per day and inject 20 megawatts of electricity to the national grid. READ: Mumias eyes cost-cutting to reverse Sh1.6bn loss Mumias reckons it will benefit from faster maturing canes, plantation under irrigation and sufficient land. Lack of land in western Kenya where Mumias is based has dimmed the miller's growth and triggered a vicious fight for sugarcane with rivals like Butali Sugar and West Kenya . Mumias posted a Sh1.67 billion loss for the year to June compared to a profit of Sh2.013 billion a year earlier and blamed cane poaching, poor weather and illegal importation of sugar for its poor performance.
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