Tuskys clinches US$18.4m rescue financing from Mauritius based fund

KENYA – The struggling retailer, Tusker Mattresses Limited has inked terms of agreement with an undisclosed Mauritius based fund, for the provision of a financing facility worth Ksh2 billion (US$18.4m) to help shore up its wobbling financial position and restock the struggling business.

The deal with the Mauritius fund will see Tuskys inject fresh working capital which the retailer says, will help them in the short term and make it more attractive to strategic investors it is courting.

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“The Tusker Mattresses Limited board of directors is pleased to confirm that we have signed terms of agreement with a Mauritius-based fund for the provision of a financing facility amounting to just over Ksh2 billion (US$18.4m) subject to fulfilling transaction condition precedents,” the company’s chairman Bernard Kahianyu said in a statement.

“This funding will help alleviate our current capital constraints impacted by Covid-19 and further reposition the business for increasing stakeholders’ value,” he stated.

Details of the loan agreement, including interest rate, repayment period and whether the debt is convertible into equity were not disclosed.

Last month, Tuskys revealed that it is seeking to sell a majority stake to a consortium made up of a private equity firm and an undisclosed foreign retailer.

The retailer, which is teetering on the brink of collapse, is weighed down by mounting debts, disgruntled unionised employees, fading supplier confidence and shrinking financial power to replenish essential items on the shelves.

The cash-crunch has seen the retailer fail to pay suppliers and resulting to closure of some of its branches.

Last week, the supermarket was forced to pay Sh15 million out of Sh26 million rent arrears for United Mall outlet in Kisumu County after auctioneers raided the premises, reports Business Daily.

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Earlier this month, Tuskys revealed that it had owed suppliers a total of Ksh6.2 billion (US$57.3m) and had agreed to pay 40 percent of the amount i.e. Ksh2.4 billion (US$22.1m) over two years.

The revelation came after the retailer paid suppliers Ksh2.7 billion (US$24.9m) in June and an additional Ksh1.8 billion (US$16.6) last month after the intervention of the Competition Authority of Kenya (CAK), which has placed it under its watch list for defaulting on suppliers.

The company has also embarked on a major comeback with the relaunch of some of its closed Tuskys supermarket outlets, alongside a new customer rewards programme dubbed ‘Tuskys Back-to-Back Sale’.

The retailer has the backing of leading suppliers who are supporting the firm’s business recovery plans on a win-win basis with stock guarantee worth Ksh1.2 billion (US$11m).

The Group’s CEO Dan Githua said the chain had already received assorted stocks, customer discount vouchers and giveaway merchandise valued at more than Ksh200million (US$1.8m), as part of the programme.

He described the reward programme as a rebirth of Tuskys with the retailer now being on a recovery path with select branches optimally stocked.

In a letter to the CAK, Tuskys said it has already put in place a system, which will stop it from directly handling suppliers’ cash.

Money paid at the till will be deposited in an escrow account, from where suppliers’ dues will be sent to them and the balance left to Tuskys.

The retailer also informed the competition regulator that the more than 100 suppliers have already signed up on the trading platform and intend to bring 90 per cent on board by end of this month.

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