Nakumatt and Tuskys supermarket seek regulatory exemption of their management and loan agreement

 

The Competition Authority of Kenya is set to determine the fate of a management and loan pact between Nakumatt and Tusky’s supermarket, which has the potential to improve relationships with suppliers, employees, and all other Nakumatt stakeholders. However, antimonopoly advocates have their eyebrows raised over the long-term effects of the partnership between the two retail giants.

In a gazette notice dated 2 February 2018, Nakumatt Holdings and Tusker Mattresses Ltd made an application to the Competition Authority of Kenya (CAK), for exemption of their proposed management and loan agreement for a period of 3 years

In the agreement, Tuskys would provide Nakumatt management services, including procurement of stock and inventory management. Also included is a loan for use in covering outstanding employee arrears and rent which has been a major source of headache for the retailer.

Recently, Nakumatt was forcibly evicted from their Nanyuki branch where they had been tenants for nine years. Goods were thrown out into the streets as looters took advantage of the situation before police arrived, Nakumatt has also been evicted from several premises including Lifestyle mall, Garden City and The Junction Mall.

Tuskys will offer recurring payment guarantees to Nakumatt suppliers to ensure they supply stocks to the following Nakumatt outlets: Village Market, Galleria, Ukay, Center, Lavington, Prestige, Mega, Ridgeways, Lifestyle, Embakasi, Garden City etc.

Additionally, Tuskys will engage with Nakumatt lenders, property owners, suppliers, commercial paper holders, utility providers, employees, creditors and stakeholders to provide reassurance in line with the ongoing efforts to ensure Nakumatt’s business continuity.

At its peak, Nakumatt was one of the biggest and most flourishing retail stores in East Africa, with branches in Kenya, Tanzania, Uganda and Rwanda (Surprisingly Nakumatt is still doing well in Rwanda-recognized in 2017 as the best taxpayer in Rwanda ).

Its downfall has led to the loss of jobs and left it billions in debt to suppliers and lenders. Currently, Nakumatt has offered the suppliers it owes an option to convert their debt into equity, a proposal that needs a 75 percent approval rate to go through. Let us wait and see how it pans out.

 

 

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