Nakumatt Holding’s administrator Peter Kahi now faces a daunting task ahead as he prepares to meet the retailer’s creditors in September when he is set to revive talks on the supermarket’s recovery plan against the backdrop of the troubled retailer’s fresh audited results.
Audit firm Parker Randall has concluded its assessment of Nakumatt’s books for the year 2017 to 2019, with creditors now set to know the firm’s true financial health at an upcoming meeting.
Nakumatt is deep in the red and it is anticipated that creditors will either be forced to write off the debt or convert it into equity, a plan they fervently rejected at a past meeting called by the administrator. Secured creditors will also have the option of selling-off the retailer’s property to recover their money.
“The auditors will present their report during the creditors meeting … The Statement of proposals will contain the way forward,” said Mr Kahi yesterday, while declining to divulge details of the audit ordered by the High Court.
Court filings indicate that Nakumatt owes its suppliers, manufacturers and landlords an estimated Sh40 billion, amounts that are unlikely to be paid off by the six branches currently in operation.
In the creditors meeting held in March last year, its more than 2,000 creditors rejected the administrator’s recovery strategy when they failed to vote on proposals that were contained in the rescue plan.
A section of creditors proposed the winding up of the retailer, questioning the viability of the strategy.
A difficult task now lays ahead for Mr Kahi next month when he seeks to once again convince creditors that include the Kenyatta family (Brookside Dairies), Chris Kirubi (Haco Industries), Kimani Rugendo (Kevian Kenya) and Linus Gitahi (Tropikal Brands) that the once biggest retailer in the region can be saved from the brink.
Kahi, whose term was extended by the court for one year to January 2020, has so far overseen the shutdown of Nakumatt’s poorly performing branches and embarked on restocking and opening of smaller-sized outlets.
As part of the recovery strategy last year, the firm announced the optimum restocking of its six key branches in Nairobi, Nakuru and Kisumu.
The plan, dubbed Nakumatt BounceBack, is allegedly supported by several local and global suppliers keen on seeing the firm back on track.
Notwithstanding its current state, Nakumatt still believes that it has a strong underlying sustainable core business that is capable of a turnaround with the support of all stakeholders.