Tuskys has disclosed that DTB Bank has agreed to restructure a Sh1.7 billion short-term loan, offering a reprieve to the retailer facing the threat of liquidation on mounting debts.
The cash-strapped supermarket chain says DTB has agreed to lengthen the repayment of the loan to an undisclosed period to ease repayment.
The bank has also agreed to provide Sh450 million in overdrafts, Tuskys acting CEO Shadwick Okumu said in the latest court filings in a case the retailer is fighting liquidation from more than 60 creditors owed Sh1 billion.
“I would wish to highlight that DTB is on board and has agreed to restructure the existing Sh1.7 billion short-term loan to a term credit,” said Mr Okumu.
The supermarket has pleaded with the court to freeze the liquidation cases for one year and allow it to continue repaying the debts, arguing that its financial position remains redeemable and its business commercially viable.
Tuskys, until recently Kenya’s top retailer with 53 stores, has less than 10 outlets operating amid stockouts. It has opted to sell assets in some of its branches following delays in receiving a Sh1.6 billion funding from an undisclosed Mauritius firm.
The cash-strapped supermarket has informed the High Court that it plans to sell non-core assets like furniture, fixtures and fittings in 19 branches, most of which landlords shut due to rent arrears.
Last August said the retailer had signed a deal to raise Sh2.1 billion short-term debt from an unnamed private equity firm based in Mauritius.
The funds were aimed at stabilising operations to make the retailer more attractive to strategic investors it is courting.
Tuskys has struggled to repay its bank loans and approached the lenders to restructure the debt.
Kenya’s retail sector has seen two major supermarkets collapse in recent years, while Carrefour franchisee Majid al Futtaim has entered the market and grown into the second biggest retailer in just four years.
Nakumatt, which grew from a mattress shop in Nakuru to have branches in Kenya and East Africa, was forced to shut down last year as it struggled to repay its suppliers, landlords and other creditors.
The same scene is playing out at Tuskys, which is fighting forced closure of its outlets by landlords and owes suppliers and banks more than Sh10 billion.
Hotpoint, which is seeking to liquidate the supermarket over a debt of Sh248 million for electronics like fridges refrigerators, cookers, and TVs, says Tuskys has not shown an acceptable plan to settle its debt.