Tuskys to sell stake in bid to raise cash to clear supplier arrears

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Tuskys
PHOTO/COURTESY

Retailer Tuskys Supermarket is aiming to sell a majority stake in the company to a Private Equity firm and a yet to be revealed foreign retailer in an effort to obtain cash to pay back arrears owed to various local suppliers.

The retailer’s intention was disclosed on Monday by the Competition Authority of Kenya (CAK), which is currently overseeing the firm’s move to clear overdue supplier credit worth billions of shillings.

“The shareholders of Tuskys have communicated that they are also exploring other funding options, including seeking a strategic investor by July 31, 2020,” the CAK said in the statement.

The competition regulator consequently revealed that should any investor make their intentions in acquiring a stake in the company known, the assessment of such a filing will be fast-tracked.

“The Authority took note of these initiatives and has thereof committed that, if the retailer opts to seek a strategic investor, the Authority shall within 14 days, and in accordance with the provisions of the Competition Act, consider and issue a determination upon submission of a merger/acquisition application,” the CAK said.

Prior to the disclosure, the retailer’s customers had protested of missing essential goods on the supermarket’s shelves signaling that some suppliers are dissociating with the company amid a liquidity crisis which the company has attributed to executive restrictions implemented to restrain the spread of the coronavirus.

If successful, the proposed deal will mark the latest share deal in the increasingly competitive and capital-intensive supermarket business.

In March, for instance, the retailer’s biggest competitor Naivas, raised Ksh. 1.5 billion from a consortium of investors that included the International Finance Corporation (IFC) and private equity firm Amethis for expansion.

Tuskys is expected to benefit from the supply of both new capital and technical expertise in operating a major retail chain.

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