Companies

Nakumatt, Tuskys dispute on Sh50m loan takes new twist

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Nakumatt managing director Atul Shah. FILE PHOTO | NMG

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Summary

  • Nakumatt has put a freeze to repaying a Sh50 million loan belonging to Tuskys’ on claims that the struggling retail chain owes it more millions.
  • Nakumatt Holdings Administrator Peter Kahi said Monday that the money it was advanced in 2018 as part of a rescue plan by Tuskys is yet to be paid as the retailer also owes it more money in debt.
  • Mr Kahi however declined to indicate the exact amount Tuskys owes the fallen retail giant, only saying that the unpaid claims had accumulated over a very long period.

Nakumatt has put a freeze to repaying a Sh50 million loan belonging to Tuskys’ on claims that the struggling retail chain owes it more millions.

Nakumatt Holdings Administrator Peter Kahi said Monday that the money it was advanced in 2018 as part of a rescue plan by Tuskys is yet to be paid as the retailer also owes it more money in debt.

Mr Kahi however declined to indicate the exact amount Tuskys owes the fallen retail giant, only saying that the unpaid claims had accumulated over a very long period.

The two retailers had earlier pursued an agreement that would have seen Tuskys provide management services, a loan, and debt guarantees to Nakumatt.

“The Sh50 million has not been paid back to Tuskys. The money has not been paid to them because they also owe us some money,” Mr Kahi said Monday.

“We can’t tell the amount Tuskys owes Nakumatt because we are still doing reconciliation. I have also been out of office in the last one month so it’s hard for me to give you the figure off head.”

In the deal, Tuskys had also proposed to offer management services to Nakumatt.

CAK had invited the two parties to submit a fresh merger application but four months later, in April 2018, Tuskys lawyers wrote to the regulator to communicate that it was re-considering its interest in the deal.

The retailer later pulled out, saying it was opposed to the proposals Nakumatt’s court-appointed administrator had presented to creditors at a meeting.

The administrator’s report released last year, however, shows that Tuskys made a new bid on November 5, 2019 to buy Nakumatt’s assets at its remaining six branches for Sh70 million.

It was the lowest bid and was vastly surpassed by Naivas Limited which had the highest offer of Sh422.5 million.

The regulator had also rejected the merger filing in December 2017, saying that the two companies had not filed the proper exemption application.

The law requires that when competitors in the same sector enter agreements that may distort competition, they need regulatory approvals.

Such deals include agreements in which one company gets an insider view of the other’s strategy or supply contracts that might amount to collusive tendering.

The new application asks the competition watchdog to exempt a management contract between the two firms, rather than the merger cited in an earlier submission.

As an operating manager, Tuskys is expected to provide specific technical services geared at avoiding further erosion on Nakumatt’s operating units, said Mr Kahi then.

“Among other services, Tusker Mattresses will provide day to day management oversight, procurement, finance, inventory and human resource management under the Administrators supervision,” the statement said.

Nakumatt went into administration on January 22, 2018 after defaulting on suppliers and banks, throwing it into an existential crisis.