All systems go for Tuskys recapitalization efforts as shareholders give unanimous approval

KENYA – The Board of Directors of Tusker Mattresses limited (TML) commonly referred to as Tuskys Supermarket have approved the ongoing strategic investor sourcing efforts, which will see injection of fresh capital into its operations to offset debts.

Tuskys is seeking to sell a majority stake to a consortium made up of a private equity firm and an undisclosed foreign retailer as part of efforts to raise cash to pay suppliers and resolve its financial troubles.

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“The Orakam Shareholders provided their nod to the acquisition of a majority stake in Tuskys by any equity investor who will further provide strategic leadership for the long- term growth of the business and for the benefit of all stakeholders,” said chairman Bernard Kahianyu said.

He added that, “The TML Board of Directors together with a team of transaction advisors are currently evaluation the various offers with the aim of concluding the recapitalization of the business in the shortest time possible.”

The recapitalization of the business follows the 2017 successful restricting of TML by establishing a corporate structure that separates the corporate ownership from management.

The company is fully owned by the family of the TML Founder, Late Mzee Joram Kamau, through Orakam Holdings Ltd.

In a statement, the retailer also revealed that the management team has also been actively engaging business stakeholders with the board’s support. The stakeholders include retail merchandise suppliers, landlords, staff, among other priority partners.

The country’s second largest retail chain has secured a suppliers’ commitment to avail supplies for sale pending the conclusion of the capitalisation.

Suppliers have signed in on a short-term portal that will ring-fence their supplies and ensure timely payment for the same.

“This option provides a much-needed lifeline for the business and secures a win-win stability option,” said Kahianyu.

Recently, Tuskys provided documents to the Competition Authority of Kenya (CAK) indicating that it had made payments to suppliers amounting to Ksh2.77 Billion (US$25.6m) in June 2020 as per the Authority’s order.

The competition watch dog stated that it has taken note of the retailers initiatives and has thereof committed that, if the retailer opts to seek a strategic investor, the Authority shall within fourteen (14) days, and in accordance with the provisions of the Competition Act, consider and issue a determination upon submission of a merger/acquisition application.

According to reports by The Star, Tuskys has also reached out to the Kenya Union of Commercial Food and Allied Workers seeking to resolve a pay cut dispute currently before the Employment and Labour Relations Court.

It had implemented a staff pay cut of between 20-25 per cent, pegging it on reduced business as a result of Covid-19.

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