Nakumatt Holdings has concluded a deal with a foreign firm, which has agreed to buy a 25 per cent stake in the company for $75 million (Ksh7.8 billion). Managing director Atul Shah said Wednesday the deal has already been concluded and they are only waiting for the money. “We are already at final stages with the investor.
We are just waiting for the money to come,” he said. ″The move is expected to reduce the spiraling debt that has tripled in the past five years following the retailer’s inability to pay its suppliers and its expansion drive.” Last year, the supermarket chain had more than 60 stores across Kenya, Rwanda, Uganda and Tanzania. Nakumatt has been in discussions with potential foreign and domestic investors to enable it to offset its debt.
The deal is part of the chain’s plan to overhaul its balance sheet and restructure a $75 million (Sh7.8 billion) debt tranche owed to four local banks, Shah said. Expansion and other investments have pushed its debt up overall to more than Sh15 billion. “Nakumatt is going through some financial stress.
Related >> Is this the man who has bought into Nakumatt?
“We are out looking for funds and we are restructuring,” said Shah, adding that the cash is expected before the end of February and would help the firm extend the tenor of its debts to more than five years.
Despite troubles facing another local retailer, Uchumi, Kenya has attracted several global brands such as Game from US, Carrefour SA of France and Botswana-based Choppies Enterprises, which have been giving Nakumatt a run for its money.
Statistics indicate formal retailers in Kenya account for about 40 per cent of sales in East Africa’s biggest market, second only to South Africa and double that of Nigeria, Africa’s largest economy. Nakumatt Holdings targets mostly middle and upper-income customers. Other homegrown competitors include Tuskys, Naivas and Chandarana Foodplus.
In 2015, Shah announced that the firm would launch 14 new branches in a bid to boost annual revenue by more than Sh103.9 billion and they also purchased Yako Supermarkets in western Kenya to enable it to achieve the target Uchumi Supermarkets, Kenya’s only publicly-listed chain store, is currently battling to repay creditors almost Sh3.6 billion. The company emerged from a four-year receivership in 2010 after a government bailout.
Last year, Nakumatt was reported to be renegotiating terms with suppliers and was undertaking a management enhancement programme to recruit and retain skilled personnel. Additional reporting by Reuters.
[crp]
Leave a comment