Plans by Tuskys siblings to acquire a Ksh2.1 billion loan to inject into the struggling business might be derailed after two minority shareholders rejected the idea and prefer to cash in on their 27.5% stake instead.
On Tuesday, the siblings voted to acquire the loan from an offshore fund save for Yusuf Mugweru who controls 17.5% of the stake in the retailer, and his sibling who controls 10%. The two want to sell their stake to the investor in question or any other buyer that shows concrete interest
The debt will be secured by shares of its investors controlling a stake of 72.5 percent, putting the shares at risk in the event of default.
Mr. Mugweru and his other sibling did not take any part in the court- backed shareholder meeting but did not oppose its agenda. The Business Daily reported on Wednesday.
“Yusuf and another shareholder did not oppose or support the agenda of the meeting,” Mr Mugweru’s lawyer, Philip Murgor, said.
“They will seek a different solution of either selling their stake to the offshore fund or any other interested buyer.”
If the two siblings dispose off their stake, it will clear the way for the rest to continue with the plan to rescue the retailer that is now looking at empty shelves after suppliers halted deliveries over defaulted payments.
Mr. Mugweru, Stephen Mukuha, Sammy Gatei, and George Gachwe each own a 17.5 percent stake in Orakam Holdings, the company that owns Tuskys Supermarkets.
John Kago, Mary Njoki and Kenneth Njeri each hold a 10 percent stake in the company.
“The majority of shareholders present at the meeting have unanimously approved the progression of ongoing efforts to formally secure structured credit facilities amounting to Ksh2 billion necessary to provide operating capital in the short to medium term,” Orakam’s chairman, Mr Kago, said in a statement.
“The shareholders reiterated their commitment to providing the necessary cooperation and support to ensure a speedy conclusion of the ongoing international capital sourcing effort which is currently at a tail end-stage with a positive response from an equity investor.”
The siblings voted to approve equity capital injection at a later stage.
Mr. Kago said the extraordinary general meeting was a significant step towards the signing of the loan agreement with the unnamed lender said to be registered in the Cayman Islands.
On the other hand, Mr. Mugweru has expressed little desire in taking part in the resuscitation plans and initially wanted to block the stake sale stating that wrangles among the company’s shareholders are yet to be ironed out.
Mr. Mugweru maintained that his brothers were yet to account for some Ksh1.6 billion that was the subject to a court suit and demanded a forensic audit of the store’s accounts covering the past eight years.
“They reached out to us last Sunday to support the share sale, but we have declined unless past problems are resolved,” Mr. Murgor said on July 26.