Just when you thought the drama revolving around the management of Tuskys Supermarkets is about to be cooled down by the proposed sale of some stake informed by the need to pay suppliers, something else happens. Tuskys is the gift that keeps on giving.
In a fresh twist, Yusuf Mugweru, the fourth born of the seven siblings who co-own Kenya’s second-largest retailer has vowed to block the sale stating that wrangles among the company’s shareholders are yet to be ironed out.
The retail chain is seeking to sell its stake to pay off its debts that stood at Ksh1.2 billion in June following intervention from the Competition Authority of Kenya (CAK) that is now surveilling the company’s every single move.
Tuskys is in talks with a private equity firm and an international retailer regarding the acquisition of the stake but the wrangles are likely to scuttle the deal or scare off the investors.
According to the Business Daily, Mr. Mugweru who owns a 17.5 percent stake in Tuskys maintains that his brothers are yet to account for some Ksh1.6 billion that was the subject to a court suit and is also demanding 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. Mugweru’s lawyer, Philip Murgor said.
“A transaction in the nature of a buyout cannot be contemplated, without the express and written approval of all shareholders. Our client has not consented or approved such a transaction,” added Mr. Murgor.
The retail chain’s current Chief Executive Dan Githua was at one time ousted only to be hauled back in over the family disputes.
Conversely, nearly ten years ago, the retail chain was rocked by a family feud that threatened to tear it down.
Two co-owner brothers of Tuskys – Stephen Mukuha and George Gachwe –were four years ago charged with theft of Ksh1.64 billion from the retail chain.
The two were arraigned in court after Mr Mugweru raised the alarm over theft from the company’s accounts.
In a judgment issued in November 2013, High Court judge George Odunga dismissed the case and asked the siblings to settle their differences for the sake of the business.
“The differences persist and we cannot proceed with the share sale deal unless settled,” said Mr Mugweru.
Years down the line, Mr. Mugweru is back at it, this time looking to block the sale of the shares until transparency in his perspective is achieved.
The private equity company and the international lender looking to buy the company want all the Tuskys’ seven shareholders to agree and make legal commitments to the sale of a majority stake in the company.
Such a move means that the siblings will seize control of the retailer to the new owners while a purge of the current leadership would be inevitable.
“The board is working to obtain an irrevocable letter of undertaking signed by all shareholders and backed by power of attorney to make this process flawless and to enable equity injection in the shortest time possible,” Tuskys informed its major suppliers, who are owed billions of shillings, in a meeting last week.
Sources familiar with the share sale deal say that the potential investors are concerned about committing resources to a deal that could be scuttled by insiders.
The concerns are not without merit considering Mr Mugweru blocked a merger deal between Tuskys and then cash-strapped Nakumatt, which has since collapsed.
The seven siblings took over the ownership of Tuskys in 2002 after the death of their father and the retail chain’s founder, Joram Kamau.
Mr Mukuha, Mr Mugweru, Mr Gachwe Sammy Gatei own a 17.5 percent stake in Tuskys each, according to disclosures in a previous court case.
John Kago, Mary Njoki and the late Mary Njeri own 10 percent stake each.
Details of the proposed transaction, including the size of capital to be raised, are yet to be disclosed.
The company told suppliers that more prospective investors had reached out to initiate talks.
“There are now firm offers from credible international investors and two more are expected over the weekend,” the company said.
“The offers will be tabled to the board, the family and bank, with an expectation of an approval quickly. Board and advisers are clearly aware of the pressure to close quickly.”
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