Mumias Sugar Company is seeking soft financing to venture into the acquisition of stakes in local sugar firms that are set for privatisation.

The firm could also turn to the bond market to raise the money.

The company on Tuesday received a favourable credit rating that it intends to use to woo international financiers to lend to it as it seeks new product lines that will prepare it for the competition that will come with the opening of the local market to regional producers in 2012.

Five state owned sugar companies including Nzoia, Miwani, Sony, Chemilil and Muhoroni are to be sold before 2012 with farmers buying 30 per cent stakes, strategic investors (51 per cent) and remaining 19 per cent sold through the Nairobi Stock Exchange (NSE) once the millers became profitable.

"Mumias has the best technical, management and financial capacity to operate sugar companies and we are waiting for the privatisation to start," said the company's CEO Evans Kidero without specify which companies it will go for. he sugar companies were to be sold this year in a bid to enhance competitiveness in the sector and meet free trade requirements stipulated under regional integration platforms.

But difficulties in clearing a debt burden of Sh42 billion owed to the government and the industry regulator Kenya Sugar Board has slowed the process.

The millers are protected from intense competition by the Common Market for Eastern and Southern Africa (Comesa) safeguard, which limits the amount of sugar that can be imported from these countries.

But the safeguard is due to expire in 2012, opening up the local sugar industry to cutthroat competition from imports from the regional trading bloc.

This has called for the local millers to diversify their income streams and reduce their unit costs.

For Mumias, the firm has moved in electricity, ethanol and water bottling productions and is looking to acquire new plants to build economies of scale for its sugar business.

The company also plans to start its sugar plantation project in partnership with the state-owned Tana River Development Authority (TARDA) that has faced opposition from the environmental groups.

The sugar miller has tapped credit rating agency Mentropol East Africa to profile its credit worthiness to prepare it for fresh borrowing.

Mumias was rated A+ for domestic Kenya Shilling currency long term by Global Credit Rating Company through its local representative Mentropol East Africa.

It was rated A1 for short term rating.

"The rating is an indication of Mumias' high credit quality and sound protection factors. It also signals the company's excellent liquidity factors, resulting in high certainty of timely payments to creditors," said Sam Omukoko, the managing director of Metropol EA.

Mr Kidero added: "We shall use this rating to negotiate better interest rates but we have not made a decision whether to go the corporate bond way, syndicated loan or other seek forms of debt," said Mr Kidero.

The sugar miller saw its net profit for the six months to December drop 21 per cent to Sh816 million as its net revenues dropped from Sh7.6 billion to Sh7.3 billion.

Shareholders at the NSE have taken notice of its performance as its share has shed 41.4 per cent in the last six months to the Monday's closing price of Sh8.25.