CIC Insurance has written off Sh59.8 million it invested in short-term debt issued by troubled retail chain Nakumatt Holdings, which had taken a total of Sh4.7 billion worth of such loans by the time it imploded.
The insurer, which had invested more than Sh70 million in the Nakumatt’s commercial paper, says in its latest annual report that it has impaired Sh59.8 million of the fixed income investments.
The move comes after default by the retailer and a meltdown in its operations marked by a fallout with suppliers and closure of branches across the country and in the region where it had expanded to in recent years.
Nakumatt’s founder Atul Shah has blamed the retailer’s difficulties on inability to refinance its loans, saying that the company’s business model relied heavily on debt.
Analysts say most of Nakumatt’s creditors could be wiped out if the company –currently under administration— is liquidated.
“In essence, all unsecured creditors, namely trade creditors, commercial paper holders and short term note holders … will suffer the maximum 100 per cent loss of their debt amounts, as the available assets would first pay off secured creditors,” asset manager Cytonn Investments said in a research note.
ALSO READ: Nakumatt seeks to amend its appeal