Tuskys row bites as KCB closes credit line

Tuskys Supermarkets’ directors were Thursday locked in a day-long crisis meeting as it emerged that KCB, one of its bankers, had suspended a multi-million shilling credit line following Tuesday’s rowdy ejection of chief executive Dan Githua.

The retail chain’s board of directors Thursday met to discuss the fate of the former CEO who has since been replaced in an interim capacity by George Gachwe, one of the firm’s co-owners.

Mr Githua’s departure has split the board into two camps, with one section accusing him of gross misconduct and the other stating his removal was neither unanimous nor procedural.

“Kindly note that a board meeting is currently underway and we will communicate to you officially regarding the issues raised,” said Tuskys head of communication Joanne Wanjala in a response to the Business Daily queries.

KCB corporate relations manager Jennifer Muindi on Wednesday wrote to the retail chain informing its directors that the lender had suspended a supply chain financing facility signed only last month.

The partnership allows Tuskys’ suppliers to receive payment for goods supplies even before their invoices fall due and also allows them to receive loans at preferential rates.

Tuskys, the second-largest retailer in the country by revenue, has more than 1,600 SME suppliers who deliver goods worth between Sh500,000 to Sh5 million every month.

“Following the incident (Mr Githua’s ejection), we are concerned about the management of the company and in particular its financial performance and ability to meet its obligations to the bank,” said Ms Muindi.

“In view of the above, and with effect from the date of this letter, we have suspended the supply chain financing facility,” stated the letter seen by the Business Daily.

Tuskys responded to the bank assuring it that managerial matters were under control and that there was no power vacuum since the retailer had already appointed Mr Gachwe as interim CEO.

READ: Power struggle at Tuskys as CEO says he is in office even after ouster

KCB and Tuskys’ partnership also involves giving customers a credit card that allows users to shop at any MasterCard-accepting outlet, including the retail chain’s shops, for an interest-free period of 45 days.

The cards attract an annual fee of Sh2,000, a monthly interest of 3.5 per cent of total outstanding balances while minimum repayment of a fifth of the total billed amount.

This partnership was, however, not terminated as per the KCB letter.

Immediately after Mr Githua’s ouster, Tuskys rushed to assure its customers, suppliers, business partners and employees that its operations were not going to be affected, cognisant of the negative impact the incident could have.

The retail chain is owned by Yusuf Mugweru Kamau, Mr John Kago, Stephen Mukuha, Mr Gachwe, Sam Gatei, Mary Njoki and Mary Njeri (deceased), some of whom do not see eye to eye.