Troubled Tuskys Supermarket owes suppliers a whopping Sh6.2 billion.
In a letter to the Competition Authority of Kenya (CAK), the cash-strapped retailer says it will settle 40 percent of the debt over a period of 8 months and two years.
“Total trade supplier debt is Sh6.2 billion. As at August 6, 2020, 40 percent of this supplier debt has been rescheduled and the respective suppliers have signed individual agreements to reschedule the debt to periods between eight months and 24 months,” Tuskys said.
Rescheduling the debts, the chain of supermarkets said, will help reorganize cash flows and meet supplier obligations.
Further, Tuskys told the authority, suppliers are on board with an arrangement to supply more goods worth Sh1.2 billion.
Goods worth Sh200 million have already been supplied, the retailer revealed.
So as to stay afloat, reports indicated that the retailer is seeking to sell a majority stake to a private equity firm and an undisclosed foreign retailer.
The rescue plans were disclosed by a transaction adviser and the CAK which is supervising the company’s settlement of supplier’s debts.
“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 three weeks ago.
The regulator said that should another investor apply to acquire a stake in the Supermarket chain, the review of such a case would 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.
The Transaction adviser pointed at the retailer’s preference to sell the stakes to a PE firm and an operator of a major Super Market.
“The discussion is around a majority stake and we are looking at PE fund together with an operator of a major supermarket,” said the adviser who sought anonymity.
For some months now, the shelves at Tuskys have been going empty, inviting speculations into the retailer’s relationship with suppliers.
Last month, the New KCC suspended supplies to the supermarket citing high amounts of accrued debts.