Struggling cereals firm linked to Kenyan tycoon Ngugi Kiuna receives $10 million buyout offer

Key Points

• The Kenyan cereal maker seeks to avoid receivership after securing a $10 million buyout offer to settle debts owed to KCB Bank Kenya.
• A High Court ruling temporarily halted KCB’s appointed receivers from assuming control, giving the company time to negotiate its financial future.
• While Proctor & Allan faces financial distress, Kiuna recently won a $13.1 million lawsuit against Heineken over a terminated distribution deal.

Proctor & Allan Limited, a Kenyan cereal manufacturer with businessman Ngugi Kiuna among its shareholders, is looking to avoid being placed under receivership after receiving a $10 million buyout offer from an unnamed buyer.

Kenyan cereal manufacturer eyes $10 million lifeline

The troubled company is pinning its hopes on the potential investor, who has reportedly offered Ksh1.2 billion ($10 million) to revive operations and settle debts owed to KCB Bank Kenya. This lifeline comes after Proctor & Allan was placed under receivership for failing to repay a $28.6 million loan. The move underscores the financial pressures squeezing Kenyan businesses.

The High Court appointed Ponangipalli Venkata Ramana Rao and Swaroop Rao Ponangipalli as receivers, effective Feb. 24. Their role is to take over the company’s assets and oversee financial restructuring. Creditors and other claimants have until Mar. 31, 2025, to submit their claims. However, last Friday, the company secured temporary orders blocking the KCB-appointed receiver managers from assuming control.

Kenya’s cereal giant battles financial woes

One of Kenya’s oldest food processors, Proctor & Allan has been producing cereals such as cornflakes, oats, and porridge mixes since the 1940s. In 2015, it borrowed Ksh3.7 billion ($28.6 million) from KCB to fund the construction of a manufacturing plant in Limuru.

But rising competition, high taxes, and economic challenges have made it difficult to keep up with repayments. The company’s financial struggles mirror those of other Kenyan firms, including cigarette manufacturer Mastermind Tobacco and automobile body firm LSHS, which have also faced financial distress.

Proctor & Allan’s ownership includes prominent corporate figures. Major stakeholders include Zephania Mbugua, former chairman of East African Cables; Edward Njoroge, former CEO of KenGen; and Ngugi Kiuna, an investor with stakes across multiple industries. The largest shareholder, Nefira Holdings, controls 76.82 percent of the company.

Kiuna’s business wins, Proctor & Allan struggles

While Proctor & Allan fights to stay afloat, Kiuna has been dealing with his own corporate battles. Just months ago, he won a legal case against Dutch brewer Heineken after Kenya’s Supreme Court upheld a Ksh1.79 billion ($13.1 million) award to Maxam Limited, his beverage distribution company.

The court, led by Chief Justice Martha Koome, ruled that Heineken unlawfully terminated its distributorship agreement with Maxam. Since its founding in 2006, Maxam had played a key role in expanding Heineken’s footprint in Kenya, Tanzania, and Uganda.

Beyond Maxam, Kiuna holds an 11.2 percent stake—equivalent to 2,192,926 shares—in BOC Kenya, a leading industrial gas manufacturer. But despite his extensive business interests, the challenges at Proctor & Allan serve as a reminder of the unpredictable nature of Kenya’s business environment.