Keystone Bank has officially taken over Bacita Sugar Company, also known as Josepdam Sugar Company, due to its failure to settle a staggering N25,358,203,258.09 debt. The takeover, which was sanctioned by the Federal High Court in Ilorin, has led to the appointment of Mr. Yunus Abdulsalam (SAN) as the company’s Receiver/Manager, effectively placing the operations of the sugar company under the control of the bank.
The move follows a series of failed attempts by KIA Africa Group, the company that acquired Josepdam Sugar Company, to fulfill its financial obligations to Keystone Bank. The takeover has sent ripples through Nigeria’s business landscape, highlighting the severe consequences of unpaid debt and the growing financial struggles facing companies in the country.
Keystone Bank’s decision to take over the company came after the court’s ruling, which required the bank to recover the debt from KIA Africa Group, which had acquired Josepdam Sugar Company. In the court order, Justice A.O. Awogboro authorized Keystone Bank to manage all of the company’s assets, including those secured by fixed and floating charges for the loan facility granted to KIA Africa Group.
The ruling also saw the freezing of 21 accounts belonging to the KIA Africa Group, further complicating the financial situation for the company. Keystone Bank’s actions were backed by the court’s decision to appoint Mr. Yunus Abdulsalam (SAN) as the official Receiver/Manager, empowering him to take full control of the company’s assets.
The court’s ruling clearly states that the appointed Receiver/Manager is to take possession of and manage all assets of the company, including the assets at the Bacita sugar factory in Kwara State, which is a major part of Josepdam Sugar Company’s operations. The court also prohibited the company’s officers or agents from interfering with the Receiver/Manager’s duties.
In a statement following the court’s ruling, Keystone Bank confirmed that it had effectively taken over the operations of Bacita Sugar Company. The bank emphasized the importance of the move in managing the company’s assets and recovering the outstanding debt. The bank also noted that the takeover was essential for the potential disposal of the sugar factory, which could generate funds to reduce the mounting debt.
A representative of Keystone Bank stated, “The takeover of the Bacita Sugar Company has become imperative in order to manage or dispose of the sugar factory and use the proceeds or part thereof to defray the enormous debt.”
The saga began when KIA Africa Group successfully acquired Josepdam Sugar Company from the Assets Management Corporation of Nigeria (AMCON). To finance the acquisition, KIA Africa sought credit backing from Keystone Bank and was granted a series of loan facilities. As part of the loan agreement, KIA Africa was required to provide an ₦8.3 billion bank guarantee, representing 75% of the balance for the purchase consideration payable to AMCON. The company was also supposed to deposit the sugar company’s title documents with Keystone Bank.
However, KIA Africa failed to meet these obligations. Despite receiving the loan facilities and securing a mutually agreed 24-month repayment plan, the company defaulted on the repayment schedule, leading to the accumulation of the debt, which ballooned to N25.3 billion.
Keystone Bank’s patience wore thin after several unsuccessful attempts to reach a resolution. The bank, as per the terms of the Debenture Deed, exercised its right to appoint a Receiver/Manager to take control of all the assets held by KIA Africa, including the sugar company.
The appointment of Mr. Yunus Abdulsalam (SAN) as the Receiver/Manager came after the failure of KIA Africa to resolve the debt issue. The bank’s management, led by CEO Mr. Hassan Imam, has emphasized its commitment to aggressively pursue debt recovery from defaulting borrowers.
In 2021, KIA Africa had announced the acquisition of Bacita Sugar Company and had big plans for revitalizing the company. Bacita Sugar Company, located in Kwara State, boasts 30,000 hectares of land, including 5,600 hectares of developed farmland for sugarcane production. The company also has a milling capacity of 40,000 tons for refined sugar and an ethanol production plant.
KIA Africa promised to restore Bacita Sugar Company to its former glory, citing plans to install new mills and power equipment, which were already on the ground and awaiting installation. The company also highlighted a pool of skilled and experienced labor waiting to be hired back into the company’s workforce.
KIA Africa assured the public that the acquisition would allow Bacita Sugar Company to become a major player in Nigeria’s sugar industry, benefiting from government policies aimed at supporting local sugar production and backward integration.
However, the company’s financial mismanagement and inability to meet its debt obligations have derailed these ambitious plans. Despite the promises of revitalization, the company has now found itself entangled in a major financial crisis that has led to its takeover by Keystone Bank.
The takeover of Bacita Sugar Company by Keystone Bank raises serious questions about the challenges facing Nigeria’s sugar industry, which has long struggled with issues related to funding, mismanagement, and government policy.
Bacita Sugar Company, once one of Nigeria’s largest sugar producers, had been positioned as a key player in the country’s efforts to boost local sugar production. The company’s difficulties, along with the struggles of other players in the sector, point to a wider issue in the industry—financial instability.
The Nigerian government has long sought to encourage the growth of local sugar production to reduce the country’s dependence on imported sugar and create jobs. However, with the continued financial woes of companies like Bacita Sugar Company, the realization of these goals remains uncertain.
As Keystone Bank now takes control of Bacita Sugar Company, many are watching closely to see how the situation will unfold. The bank has indicated that it may dispose of the sugar factory in order to recover part of the debt owed to it. This raises questions about the future of the factory and the potential loss of jobs for those who rely on the sugar company for their livelihoods.
For now, the immediate priority is managing the company’s assets and seeking ways to recover the N25.3 billion debt. Whether the sugar factory will continue operations or be sold off remains to be seen, but the situation underscores the risks involved in business operations and the consequences of failing to meet financial obligations.
Keystone Bank has made it clear that it is committed to ensuring that KIA Africa’s default does not go unpunished, and that it will do everything in its power to recover the outstanding debt.
