Debt-ridden regional retailer Tuskys supermarket says it is exploring funding options, including seeking a strategic investor by end of July.
According to the Competition Authority of Kenya, the retailer has made payments to suppliers amounting to Ksh2.77 Billion in June 2020 as per its order.
“Over the past 30 days, the Authority has held four (4) meetings with Tuskys to review the documentation submitted and interrogate its proposed debt settlement plan,” CAK said in a statement.
“Tuskys has provided documents indicating that it made payments to suppliers amounting to Sh2.77 billion in June 2020 as per the Authority’s order.”
The retailer disclosed 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 the continuation of supplies.
This is part of Tuskys’ debt settlement plan for all debt owed to suppliers over ninety (90) days.
“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 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,” said CA in an update.
“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,” CAK added.
Tuskys Supermarkets has been facing cash flow challenges due to an unsettled KShs1.2 billion debts to its suppliers.
This saw Tuskys consolidate some of its branches to implement social distancing, and personal hygiene measures better due to the Covid-19 pandemic.
Consequently, due to its Ksh.200 million monthly wage bill to its estimated 6,000 staff members, it had found it difficult to pay them. This forced it to effect cuts on staff including the closure of more branches and more redundancies.
— Digital retailer (@DanGithua) July 15, 2020
However, the Employment and Labour Relations Court ordered the retailer to embrace dialogue as provided for by a memorandum of understanding (MOU) between the Labour Ministry, the Central Organisation of Trade Unions (COTU) and the Federation of Kenyan Employers (FKE) to reach an agreeable resolution of the dispute.
According to The Africa Report, “Tuskys current predicament and its solution will shape Kenya’s retail sector significantly. Like most retail chains in the country, the chain owns almost nothing but its brand, making its potential failure a big risk both for the retail supply chain and for the economy.”