Choppies sells assets in Kenya’s shut operations to finance debt

KENYA – Botswana based retailer, Choppies supermarket has put up for sale its retail equipment and property in Kenya weeks after scaling down local stores from more than 15 to two.

The retailer, which did not specify in regulatory filings how much it expects to fetch, said proceeds will help to retire some of its debt.

“Operations have since been scaled down to only two stores and negotiations are ongoing to sell equipment to local operators and/or existing landlords to clear some of the outstanding liabilities,” said the Botswana Stock Exchange-listed Choppies in a circular to shareholders.

According to a Business Daily report, Choppies fired 583 workers in recent months as it struggled to survive strained cash flows and heightened competition for Kenyan shopping basket.

The retailer axed 486 workers in November 2019 while 97 others left months earlier, according to documents filed in court.

Choppies and the Kenya Union of Commercial Food and Allied Workers are embroiled in a court battle over fears it may quit Kenya without settling dues of the laid off staff.

“486 employees were declared redundant by a notice dated November 15, 2019…51 employees were declared redundant at Nanyuki by notice dated October 31, 2019 while 46 employees exited employment for other reasons other than redundancy,” court documents say.

The workers who left Choppies accounted for 72 percent of the retailer’s 799 unionisable workers.

Choppies last year announced a plan to sell more than half of its 15 stores amid struggles to grow market share.

The sale plan came four years after it acquired Ukwala stores for Sh1 billion (US$9.4m) as a launch pad to East Africa. Choppies owns 75 percent of the Kenyan unit with the balance held by local shareholders Export Trading Group (ETG).

It has already written off Sh1.6 billion (US$15m) from the local subsidiary. The retailer informed investors that its inability to access loans led to stock-outs in the Kenya operations.

Choppies troubles started after the retailer was suspended from trading at the Johannesburg and Botswana stocks exchanges in November 2018 on account of the company’s auditors PwC’s inability to finalise the 2018 financial statements due to certain irregularities.

This led to the undertaking of a forensic investigation of which the report was released in September highlight alleged questionable dealings involving its suspended Chief Executive Officer, Ramachandran Ottapath.

These include accounting irregularities around bulk sales and inventory at its stores in SA and Zimbabwe, and store acquisitions in SA.

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