Mastermind Tobacco (K) Ltd issues a notice of termination of contracts of about 1,000 employees.
Four days after I&M Bank forced the cigarette maker into administration due to over undisclosed debt, troubled Mastermind Tobacco (K) Ltd has sent notice of termination of contracts to around 1,000 employees.
The firm owned by the estate of the late tycoon Wilfred Murungi stopped cigarette production six months ago (June)
It was subsequently placed under administration on December 14, joining the growing list of businesses that are struggling and hoping to be saved through the formal insolvency process in a challenging operating environment.
“We hereby notify all employees that on the placement of the company under administration all existing contracts of employment stand automatically terminated, in accordance with the provisions of the law,” joint administrators Swaroop Rao Ponangipalli said in a notice to all employees dated December 18, 2023.
According to the notice, employees interested in continuing their employment with the company are required to submit their applications in writing but such re-employment will be subject to Joint Administrators’ approval and in accordance with the newly negotiated terms and conditions.
“Any such re-employment will be communicated only after the initial assessment of whether the operations can continue at a financially viable level, which determines the number of employees required to be re-employed by the Joint Administrators,” said Ponangipalli.
“Any employee, who is not re-employed, in writing, ceases to be the employee of the company with effect from the date of appointment of the Joint Administrators (December 14).”
The notice did not disclose the number of employees affected but the firm through its website puts the total number of its employees at more than 1,000.
“We are an indigenous company employing more than 1,000 people throughout East and Central Africa,” the firm says on its website.
I&M Bank appointed Mr Ponangipalli as the joint administrator for Mastermind Tobacco, Kenya’s second-largest cigarette manufacturer whose signs of financial distress began manifesting in 2018 through delayed salary payments.
Latest data from the Office of the Official Receiver shows an increasing number of firms sliding into financial distress, failing to survive the administration process and eventually being liquidated.
Mastermind Tobacco, the only indigenous tobacco company in Kenya with its headquarters in Nairobi, was involved in tobacco growing, cigarette manufacturing and marketing.
It has a presence in eight countries in East, Central and Southern Africa: Kenya, Uganda, Tanzania, Malawi, Zambia, DRC, Somalia and South Sudan.
Since its inception in 1987, its brand portfolio had grown to 12 with Supermatch Kings being the flagship brand in the region.