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- PKF Consulting Limited (PKF) was appointed as Nakumatt Holdings’ administrator.
- Nakumatt placed under administration on 22nd January 2018.
- Nakumatt is the first significant private sector insolvency restructuring in Kenya under the Insolvency Act, 2015
Nakumatt creditors who include local lenders KCB Group, Standard Chartered Bank Kenya Ltd, Diamond Trust Bank Kenya Ltd, suppliers, and landlords, will meet Tuesday to vote on the dissolution of East Africa’s once biggest supermarket chain.
The meeting has been called days after an independent audit report by Parker Randall Eastern Africa on the retailer’s annual and financial statements noted irregularities in the numbers as of February 2018.
Peter Kahi, the court-appointed administrator of the troubled supermarket chain, says the creditors’ only meeting set for on January 7 will formally end the Nakumatt brands should the creditors support the liquidation plan.
Nakumatt Holdings Limited (Under Administration) is a family-owned business that was established in 1987. Until February 2017 NHL had 60 branches across the region (44 in Kenya, 8 in Uganda, 5 Tanzania and 3 in Rwanda).
As at April 2018, the Company had scaled down its operations to 7 branches in a bid to keep afloat. It was placed under administration on 22nd January 2018.
According to Administrators’ Statement of Proposal, the retailers’ revenue grew from KShs 40.4 billion in 2013 to a peak of KShs 52.0 billion in 2017, an average growth of 7% YoY. Sales growth in 2018 dropped by 70% to KShs 15.4 billion as a result of branch closures and reduced sales in all branches due to reduced stock supplies. Sales growth is further seen to decline by 88% in 2019 with reduced operations.
“Nakumatt Holdings has been generating an average EBITDA of KShs 155 million for the period 2013-2019 with the EBITDA/sales ratio dropping from an average of 6% in 2013-2016 to -75% in 2019.”
“With the sale of assets to Naivas Ltd having been concluded, the administrator distributes and appropriates funds of the company to the various classes of creditors in line with IA 2015, after meeting costs of the administration,” said Mr. Kahi of the KSh422 million.
In the statement, Naivas Supermarkets paid KSh422 million for Nakumatt’s remaining assets, emerging the highest bidder against rivals Chandarana who offered KSh246 million for the six stores while Tuskys bid KSh70 million for three branches.
The total market value of all the assets in the remaining six branches were valued at KShs 110.5 Million. A forced sale value was determined at approximately 30% lower rate amounting to KShs 77.5 million.
The creditors are owned Ksh 38 billion and the administrators will share about KSh422 million received from the sale of six Nakumatt branches to Naivas.
“An attempted turnaround of the business would be very costly and the company is likely to be loss-making for the better part of the turnaround window, implying that such a turnaround would need to be financed by additional debt to sustain operations before achieving breakeven,” says the notice.
“The Administrator is of the view that it is likely to be difficult to attract an investor to inject the substantial amount of equity required to restructure NHL’s balance sheet due to the current high degree of financial leverage.”
