Botswanan retailer Choppies Enterprises has said it will exit the Kenyan market through its subsidiary in its 2020 financial year citing negative cash flow that has been impacted by adverse trading conducts.
“Choppies Distribution Kenya Limited is a non‐operating entity and since the cash flow of Choppies Enterprises Kenya Limited (Kenya) was negatively impacted by adverse trading conducts. Management has decided to fully impair Choppies Distribution Kenya Limited and exit from the country during the financial year 2020,” the Group revealed in its 2019 Annual Report.
“All the stores except one is disposed of during the financial year 2020 and the realized amounts have been used to settle the liabilities.”
Out of its 15 branches spread out across the country in Nairobi, Nakuru, Kericho, Bungoma, Kisumu, Kisii and Athi River, some have been occupied by Tuskys Supermarket, Quick Mart Supermarket, Chandarana.
“The Board is hopeful to complete the remaining formalities and exit the country by once travel restrictions have been lifted.”
The Group disclosed Ksh.850 million in local banks at the end of its operations in the country in October last year. It received a Ksh.300 million overdraft facility from the United Bank of Africa (UBA) Kenya and Ksh.300 million bank facility with Absa Kenya to finance expansion operations at 12.7 percent interest.
In July 2019, the retailer reveals it obtained a Ksh.250 million overdraft facility from I&M Kenya to finance working capital over a five-month period- a facility guaranteed by Shanta Retail Holding- a minority shareholder in the chain.
It also received an additional Ksh.430.8 million facility from the minority shareholder (Shanta Retail Holding Limited) before opting out of the local scene in October.
The Botswana holding company- Choppies Enterprises Limited wrote impaired the Kenyan investment at a cost of Ksh.1.7 billion .
It has guaranteed part of liabilities in Kenya among them Ksh.77 million worth of goods from local suppliers among them Kapa Oil, Unga Limited, DelMonte Kenya and Haco Tiger Brands East Africa.
In Tanzania, the Group says it was approached by Majid Al Futtaim Retail (trading as Carrefour) (MAF), to acquire its Aura and Mlimani stores.
“Management is also negotiating with another 3rd party to buy the Makumbusho’ store and hope to provide a proposal on that transaction in due course. Management is already disposed the remaining store which is Makumbusho to a 3rd party,” it revealed in the report.