Yusuf Mugweru, who holds a 17.5 per cent stake in Tuskys, has renewed his objection to a plan to rescue Nakumatt, saying wrangles among the retail chain’s shareholders are yet to be resolved.
Mr Mugweru’s lawyer has written to the Competition Authority of Kenya to object to the proposed partnership between the two retailers.
He had initially objected to dealings between the two firms in November last year when Tuskys had sought CAK’s approval to merge with Nakumatt.
A sibling of Tuskys’ family owners has renewed his objection to a plan to rescue Nakumatt, saying wrangles among the retail chain’s shareholders are yet to be resolved.
Yusuf Mugweru’s lawyer has written to the Competition Authority of Kenya (CAK) to object to the proposed partnership between the two retailers. Mr Mugweru has a 17.5 per cent stake in Tuskys.
He had initially objected to dealings between the two firms in November last year when Tuskys had sought CAK’s approval to merge with Nakumatt.
In response to Mr Mugweru’s objection, the CAK asked Tuskys to resolve internal shareholder wrangles if it wished to have the merger application considered.
The two retailers were later ordered to file fresh applications as they had made an error in the original filing.
Nakumatt and Tuskys have since sought regulatory exemption to a deal in which Tuskys will provide Nakumatt with credit and management services, rather than a merger.
Mr Mugweru’s lawyers claim that Tuskys “dominant” shareholders have taken “no steps whatsoever” to resolve the long standing disputes.
“Indeed both the said shareholders and their advocates have treated our client with utter contempt and have to date refused to provide our client with any information regarding the negotiations with Nakumatt Holdings Ltd,” says their letter.
Mr Mugweru’s lawyers requested a meeting with the CAK. However, in a January response, the authority advises Mr Mugweru’s lawyers to wait until a gazette notice is published on the application, following which they will have 30 days to submit their views.
The gazette notice was filed Friday and the lawyers told the Business Daily that they intend to re-file their objection within the legally stipulated window.
Nakumatt’s position in the retail market has deteriorated steadily over the last one year as the company is weighed down by heavy debt.
Tuskys stepped in, offering to guarantee Nakumatt’s debts and provide management services.
A court-appointed administrator last week appointed Tuskys as the new managers of Nakumatt though the decision is still subject to regulatory approval.
Mr Mugweru’s main objection to the deal is that the retailer does not have the financial capacity to revive the heavily indebted Nakumatt. He claims that Tuskys has not turned a profit since 2012.
He also claims that years of bad blood between the owners have spilt over into this deal. He says that the dominant shareholders have failed to inform him of the ongoing deals.
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