Tuskys set to sell majority stake to an equity investor
Wednesday, July 29th, 2020
- For quite a while, Tuskys experienced ownership wrangles as the siblings battled for control which culminated in the adoption of a corporate structure in 2017 that separated company management from corporate ownership.
- In 2016, two of the company directors, Stephen Mukuha and George Gachwe were arraigned in court over allegations of stealing Sh1.6 billion from the Supermarket chain.
Lewis Njoka @LewisNjoka
Tuskys Supermarkets shareholders have resolved to sell majority stake to an equity investor in a bid to recapitalise the troubled retailer, a move that could see them lose control of the family-owned business.
Board of directors said shareholders of Orakam Holdings Ltd, which owns the supermarket, met on July 19 and approved a decision to sell majority stake to an equity investor.
“The Orakam shareholders provided their nod to the acquisition of a majority stake in Tuskys by an equity investor who will further provide strategic leadership for the long term growth of the business and for the benefit of all stakeholders,” said Tusker Mattress Ltd (TML) Chairman, Bernard Kahianyu in a statement.
“Board of Directors together with a team of transaction advisors are currently evaluating the various offers with the aim of concluding the recapitalisation of the business in the shortest time possible,” he added.
Tusker Mattresses Ltd, which owns the Tuskys Supermarkets brand, is fully owned by the family of the founder, Joram Kamau, through Orakam Holdings Ltd.
With the coming in of an equity investor, however, this is bound to change. An equity investor refers to a person who puts in money into a business in exchange for share ownership while majority stake means the investor will acquire over 50 per cent of the company.
Present at the meeting were seven shareholders namely Mary Njoki Kamau, Stephen Mukuha Kamau, Yusuf Mugweru Kamau, Sammy Gatei Kamau, John Kago Kamau, and Kenneth Njeri.
This even as TML tried to secure a deal with suppliers to avail goods for sale pending the conclusion of the capitalisation effort.
“Under this arrangement, 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 the much-needed lifeline for the business and secures a win-win stability option,” said Kahianyu.
For quite a while, Tuskys experienced ownership wrangles as the siblings battled for control which culminated in the adoption of a corporate structure in 2017 that separated company management from corporate ownership.
In 2016, two of the company directors, Stephen Mukuha and George Gachwe were arraigned in court over allegations of stealing Sh1.6 billion from the Supermarket chain.
Recently, the retailer has found itself in financial trouble that saw it placed under the radar of the Competition Authority of Kenya (CAK) for failing to pay suppliers within the 90 day period stipulated by the law.
In a meeting with Kenya Union of Commercial Food and Allied Workers (KUCFAW) held last week, Tuskys management said it plans to send an unknown number of employees on unpaid leave citing cash flow challenges emanating from reduced business.
This is in addition to 80 employees who were declared redundant the retailer closed down four outlets in Mombasa, Nairobi and Kitale.
According to the company management, sales have reduced by 62 per cent due to the coronavirus pandemic.
Recently, CAK announced that Tuskys paid its suppliers Sh2.77 billion in the month of June as part of debt owed to them and presented a payment plan that will see it clear all debts owed to suppliers in the next four months.