Directors of troubled retailer Tuskys Supermerket have approved the sale of a majority stake to an equity investor, it announced yesterday.
This settles concerns that a feud threatened the deal following a spilt among the siblings in the family-owned business.
In a statement, the Tusker Mattresses Limited (TML) Board of Directors said ongoing plans to recapitalise the business are on schedule.
It is seeking to sell a majority stake to a consortium made up of a private equity firm and an undisclosed foreign retailer as part of efforts to raise cash to pay suppliers and resolve its financial troubles.
The statement said a board meeting held at the Ole Sereni Hotel on July 19, saw the seven shareholders approve efforts to get a strategic investor sourcing efforts, which is a crucial development and lifeline for the business.
Mary Njoki Kamau, Stephen Mukuha Kamau, Yusuf Mugweru Kamau, Sammy Gatei Kamau, John Kago Kamau,George Gashwe Kamau and Kenneth Njeri make up the board.
The company is fully owned by the family of the TML Founder, the late Mzee Joram Kamau, through Orakam Holdings Ltd, a body corporate with a head office at the Karen Office Park.
“The Orakam Shareholders provided their nod to the acquisition of a majority stake in Tuskys by any equity investor who will further provide strategic leadership for the long- term growth of the business and for the benefit of all stakeholders,” chairman Bernard Kahianyu said.
He said the board together with a team of transaction advisors are evaluating various offers and hope to conclude the recapitalisation of the business in the shortest time possible.
As the strategic investment option proceeds, the management team has also been actively engaging business stakeholders with the board’s support, Kahianyu said.
The stakeholders include retail merchandise suppliers, landlords, staff, among other priority partners.
He said the country’s second largest retail chain has secured a suppliers’ commitment to avail supplies for sale pending the conclusion of the capitalisation.
Suppliers have signed in on a short-term portal that will ring-fence their supplies and ensure timely payment for the same.
“This option provides a much-needed lifeline for the business and secures a win-win stability option,” said Kahianyu.
Last week, the Competition Authority of Kenya (CAK) said the retailer had provided documents indicating that it made payments to suppliers in June 2020, as per its order.
It had a Sh1.29 billion supplier debt which was under CAK probe.
The competition watchdog also said it is monitoring development on shareholders’ plans to seek funding options, including the strategic investor by July 31, 2020.
“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,” director-general Wang’ombe Kariuki said.
Tuskys has also reached out to the Kenya Union of Commercial Food and Allied Workers seeking to resolve a pay cut dispute currently before the Employment and Labour Relations Court.