KENYA – Kenyan retailer Tuskys Supermarket is seeking a fresh capital injection into its operations through the sale of the business’s majority stake to a consortium made up of a private equity firm and an undisclosed foreign retailer in bid offset its debts.
The retailer’s rescue plans have been disclosed by a transaction adviser and the Competition Authority of Kenya (CAK), which is supervising the company’s settlement of supplier dues worth billions of shillings that remained unpaid for months, reports Business Daily.
If successful, Tuskys is expected to benefit from the supply of both new capital and technical expertise in operating a major retail chain.
“The shareholders of Tuskys have communicated that they are also exploring other funding options, including seeking a strategic investor by July 31, 2020,” the CAK said in a statement.
The regulator said that should an investor apply to acquire a significant stake in the retailer, the review of such a filing will be fast tracked.
“The Authority took note of these initiatives and has thereof committed that, if the retailer opts to seek a strategic investor, the Authority shall within 14 days, and in accordance with the provisions of the Competition Act, consider and issue a determination upon submission of a merger/acquisition application,” the CAK said.
Tuskys has already made progress in reducing its liabilities ahead of the proposed entry of the new investor. So far the retailer has paid suppliers a total of Sh2.7 billion.
“Over the past 30 days, the Authority has held four meetings with Tuskys to review the documentation submitted and interrogate its proposed debt settlement plan,” the CAK said.
“Tuskys has provided documents indicating that it made payments to suppliers amounting to Sh2.77 billion (US$25.6m) in June 2020 as per the Authority’s order.”
Tuskys became the first major retailer to face the scrutiny of the CAK’s Buyer Power Department that was created after former supermarket giant Nakumatt Holdings went under with Sh18.5 billion of supplier debt.
The CAK says Tuskys has presented a new plan to settle the outstanding supplier debt over the next four months.
“The Authority shall conduct compliance checks on a weekly basis to ensure adherence to the presented debt settlement plan,” the regulator said.
“Lastly, as the Authority continues to interrogate the financial statements, and management accounts made available by Tuskys, we call upon suppliers who may be aggrieved, and have not presented their matters to the CAK, to continue doing so. This will enable the Authority to establish Tuskys’ accurate debt portfolio.”
The fact that the regulator is monitoring Tuskys’ operations is expected to give confidence to suppliers, including some whose business with the retailer runs into hundreds of millions of shillings per year.
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