Supermarket chain Tuskys planned to inject Sh650 million into Nakumatt Holdings in the aborted rescue plans that envisaged a merger of the two companies two years ago.
Documents from Nakumatt’s administrator PKF Kenya reveals that the cash injection was part of a pact that would have also seen Tuskys pay suppliers on behalf of Nakumatt and offer rental guarantee to cushion the latter from evictions.
In the end, Tuskys advanced Nakumatt only Sh50 million.
Supermarket chain Tuskys planned to inject Sh650 million into Nakumatt Holdings in the aborted rescue plans that envisaged a merger of the two companies two years ago.
Documents from Nakumatt’s administrator PKF Kenya reveals that the cash injection was part of a pact that would have also seen Tuskys pay suppliers on behalf of Nakumatt and offer rental guarantee to cushion the latter from evictions.
In the end, Tuskys advanced Nakumatt only Sh50 million. The merger plans, however, failed to materialise after the Competition Authority of Kenya (CAK) rejected the bid, saying that providing loans does not amount to a business combination.
Tuskys subsequently pulled out of the proposed deal, frustrating Nakumatt’s recovery plans. The decision had great ramifications on Nakumatt’s recovery plans and events that followed only threw the debt-ridden retailer deeper into the red.
“Tusker Mattresses Limited [Tuskys], for reasons best known to them, withdrew their promised support, this meant that the rental guarantee given to the landlords was lifted, there were no more supplies from the suppliers as their supplies were premised on the basis and security that Tusker mattresses Limited would pay on behalf of Nakumatt Holdings Limited,” reads part of the report.
“…and it also meant that the demonstrated faith by Tusker Mattresses Limited of agreeing to inject into the company’s business Sh650 million was lifted.”
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 Sh50 million 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 (Sh2.6bn) followed by operating expenses (Sh799.3m) and landlord payments (Sh586.2m).
The company’s creditors met Tuesday and voted for its liquidation.
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