KENYA – Following Tuskys Supermarket’s plan of seeking a strategic investor to inject capital into its operations, a fresh round of fallout among the siblings who own the retail chain has emerged threatening the plan.
Tuskys is planning to sale the business’s majority stake to a consortium made up of a private equity firm and an undisclosed foreign retailer in a bid to offset its debts.
This was revealed in a letter by the Competition Authority of Kenya (CAK), committing 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.
Yusuf Mugweru, the fourth born of the seven siblings, has vowed to block the deal, saying wrangles among the retail chain’s shareholders are yet to be resolved, reports Business Daily.
Mr Mugweru, with a 17.5 per cent stake in Tuskys, reckons his brothers are yet to disclose the whereabouts of some Sh1.6 billion that was the subject to a court suit and is also demanding a forensic audit of the store’s accounts covering the past eight years.
“They reached out to us last Sunday to support the share sale, but we have declined unless past problems are resolved,” Mr Mugweru’s lawyer, Philip Murgor.
“A transaction in the nature of a buyout cannot be contemplated, without the express and written approval of all shareholders. Our client has not consented or approved such a transaction,” he added.
His objection looks set to complicate Tuskys’ commitment to get the backing of all shareholders and close the share sale deal in the coming weeks.
The prospective equity investors want all the Tuskys’ seven shareholders to agree and make legal commitments to the sale of a majority stake in the company.
“The board is working to obtain an irrevocable letter of undertaking signed by all shareholders and backed by power of attorney to make this process flawless and to enable equity injection in the shortest time possible,” Tuskys informed its major suppliers, who are owed billions of shillings, in a meeting last week.
In the letter by CAK announcing Tusky’s plan, the authority also stated that over the past 30 days they have held four (4) meetings with Tuskys to review the documentation submitted and interrogate its proposed debt settlement plan.
CAK revealed that Tuskys has provided documents indicating that it made payments to suppliers amounting to Ksh2.77 Billion in June 2020 as per the Authority’s order.
In addition, Tuskys has gone further to communicate to the Authority that it has negotiated for moratoriums and extensions of its facilities with its lenders and that it was in talks with key suppliers to ensure continuation of supplies.
“In regard to the presented debt settlement plan, and cognizant of the retailer’s prevailing circumstances, the Authority is amenable to the plan presented that will result in all suppliers’ outstanding invoices progressively settled over a period of four (4) months,” stated CAK.
The Authority shall conduct compliance checks on a weekly basis to ensure adherence to the presented debt settlement plan.
Lastly, as the Authority continues to interrogate the financial statements, and management accounts availed by Tuskys, they have called upon suppliers who may be aggrieved, and have not presented their matters to the CAK, to continue doing so. This will enable the Authority establish Tuskys’ accurate debt portfolio.
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