Tuskys to sell majority stake in rescue efforts
In Uganda, Tuskys has already shown signs of distress and has vacated some stores in Kampala. PHOTO | FILE
What you need to know:
- A director at Tuskys confirmed the discussions over sale of a majority stake, adding they are at a delicate stage.
- The proposed transaction, if successful, will see the new investor take control of the board and management of the family business that was founded by the late Joram Kamau.
Supermarket chain Tuskys is seeking to sell a majority stake to a consortium made up of a private equity firm and an undisclosed foreign retailer as part of efforts to raise cash to pay suppliers and win back confidence.
The retailer’s rescue plans have been disclosed by a transaction adviser as it seeks a settlement plan for supplier dues worth billions of shillings that have remained unpaid for months.
“The shareholders of Tuskys have communicated that they are also exploring other funding options, including seeking a strategic investor by July 31, 2020,” the Competition Authority of Kenya said in a statement.
The Competition Authority of Kenya said in the statement that should an investor apply to acquire a significant stake in the retailer, the review of such a filing will be fast tracked.
Tuskys has already shown signs of distress in Uganda vacating some stores including one on Ham Towers in Makerere, Kampala.
A transaction adviser tapped to guide Tuskys on the deal indicates that the family-owned retail chain is seeking to sell a majority stake to a private equity firm and a supermarket operator.
“The discussion is around a majority stake and we are looking at private equity fund together with an operator of a major supermarket,” said the adviser who sought anonymity.
Tuskys is expected to benefit from the supply of both new capital and technical expertise in operating a major retail chain.
For weeks now, shoppers have complained of missing essential goods on the retailer’s shelves, suggesting that some suppliers are severing ties with the company amid a cash crunch, which the retailer has blamed on restrictions imposed to curb the spread of Covid-19.
A director at Tuskys confirmed the discussions over sale of a majority stake, adding they are at a delicate stage.
The proposed transaction, if successful, will see the new investor take control of the board and management of the family business that was founded by the late Joram Kamau.
Mr Kamau left the retailer in the hands of his children, according to disclosures in a past court case.
Debt settlement plan
Tuskys has already made progress in reducing its liabilities ahead of the proposed entry of the new investor.
“Over the past 30 days, the Competition Authority of Kenya has held four meetings with Tuskys to review the documentation submitted and interrogate its proposed debt settlement plan,” the Competition Authority of Kenya said.
Tuskys has already provided documents indicating that it made payments to suppliers amounting to Shs99b in June.
