AUDIT

Tuskys remains under watch after Sh2.7bn debt settlement

Shareholders looking for strategic investor

In Summary

•Over the past 30 days, the authority has held four meetings with Tuskys to review the documentation submitted and interrogate its proposed debt settlement plan.

•CAK has called on suppliers who may be aggrieved, and have not presented their matters to the CAK, to continue doing so.

Tuskys branch in Kisii.FILE
Tuskys branch in Kisii.FILE

Tuskys is still on the radar of the Competition Authority of Kenya (CAK), despite settling a Sh2.77 billion supplier debt last month.

The competition watchdog yesterday said the retailer has provided documents indicating that it made payments to suppliers in June 2020, as per the its order.

The retailer is now shopping  for a fresh capital injection, which CAK said it is monitoring.

 
 

It had earlier failed to present a payment plan or evidence of negotiations with affected suppliers, leading to a probe into its accounts.

Tuskys was among 25 mid and large retailers, which were being investigated by CAK for abuse of power, in a probe that commenced in late April 2020.

“Over the past 30 days, the authority has held four meetings with Tuskys to review the documentation submitted and interrogate its proposed debt settlement plan,” CAK director-general Wang'ombe Kariuki said in a statement.

The authority required Tuskys to submit a debt settlement plan for all debt owed to suppliers over 90 days, and commence honouring its commitments while prioritising distressed suppliers and those supplying Fast-Moving Consumer Goods.

Further, the authority issued Prudential and Reporting Orders to Tusker Mattresses Limited (Tuskys), requiring it to submit records revealing the full extent of debt owed, financial statements and records, sales forecasts, among others.

Yesterday, CAK said it is also monitoring development on shareholders’ plans to seek funding options, including seeking a 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,” Wang’ombe said.

 

If Tuskys goes ahead to bring a strategic investor, it will be among others be required to settle outstanding invoices progressively over a period of four months.

“The authority shall conduct compliance checks on a weekly basis to ensure adherence to the presented debt settlement plan,” it said yesterday.

CAK confirmed the retailer has communicated indicating it has negotiated for moratoriums and extensions of its facilities with its lenders.

It is also in talks with key suppliers to ensure continuation of supplies.

Meanwhile, CAK has called on suppliers who may be aggrieved, and have not presented their matters to the CAK, to continue doing so.

“This will enable the authority to establish Tuskys’ accurate debt portfolio,” said Wang’ombe.

Delayed payment to suppliers has left the retailer at loggerheads with its suppliers, evident with empty shelves in some sections of the retailers’ stores.

It is currently struggling to pay suppliers, facing stock-outs, and salary delays dating back to April.

CEO Dan Githua has however put on a brave face in trying to salvage the retailer, despite a drop on sales by more than 35 per cent (April-May).

With about 6,000 employees, the retailer is struggling to meet its about Sh200 million monthly wage bill.