Tuskys lent Nakumatt Sh50m in crisis days

Supermarket chain Tuskys loaned its rival Nakumatt Holdings Sh50 million in a bid to rescue the company, according to records seen by the Business Daily.

A report by Nakumatt’s administrator PKF Kenya shows that the Tuskys loan was among the cash inflows at the bankrupt retailer in the period between January 22, 2018 and November 30, 2019. It was not clear whether Nakumatt repaid the loan.

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

Tuskys provided the loan as part of its plans to acquire a stake in Nakumatt. The parties in 2017 notified the Competition Authority of Kenya (CAK) of their plans to merge but the regulator rejected the application, notifying them that providing loans does not amount to a merger.

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 its was opposed to the proposals Nakumatt’s court-appointed administrator had presented to creditors at a meeting.

The administrator’s report, 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 Tuskys loan represented 1.2 percent of the total Sh4.1 billion cash inflow at Nakumatt in the 22 months. It was the third largest item after asset sales (Sh185.9 million) and debt collection (Sh3.9 billion).

The largest cash outflow in the review period was supplier payments (Sh2.6 billion) followed by operating expenses (Sh799.3 million) and landlord payments (Sh586.2 million).