Tuskys signs Sh2bn rescue deal

Supermarket chain Tuskys says it has signed an agreement with an undisclosed Mauritius-based fund for Sh2 billion capital injection to help address its financial woes.

“This funding will help alleviate our current capital constraints impacted by Covid-19 and further reposition the business for increasing stakeholder's value,” read a statement by Tuskys chairman Bernard Kahianyu.

The cash-crunch has seen the retailer fail to pay suppliers, resulting in stockouts and closure of some of its branches. Last week, the supermarket was forced to pay Sh15 million out of Sh26 million rent arrears for United Mall outlet in Kisumu County after auctioneers raided the premises.

Earlier this month, Tuskys revealed that it had owed suppliers a total of Sh6.2 billion and had agreed to pay 40 percent of the amount (Sh2.4 billion) over two years.

The revelation came after the retailer paid suppliers Sh2.7 billion in June after the intervention of the Competition Authority of Kenya (CAK), which has placed it under its watch list for defaulting on suppliers.

In July, the supermarket chain said it needed immediate capital injection of Sh2 billion to survive in the short term as it scrambles to win back the confidence of suppliers and navigate a shareholder fallout.

The family-owned retailer is rocked by wrangles among its shareholders with one of the seven siblings having vowed to block an investor deal.

The retailer had said it was looking to raise new capital from a strategic investor in exchange for a majority stake under the rescue bid.

Details of the Mauritius fund are yet to be disclosed and whether a share sale is part of the agreement.

Tuskys became the first major retailer to face the scrutiny of CAK’s Buyer Power Department that was created after former supermarket giant Nakumatt Holdings went under with Sh18.5 billion of supplier debt.