Tusker Mattresses Limited (Tuskys) paid KSh 2.77 billion to its suppliers in June, following an order from the Competition Authority of Kenya (CAK). The retailer is seeking alternative funding options, eyeing a strategic investor by July 31st, 2020.
“Over the past 30 days, the Authority has held four (4) meetings with Tuskys to review the documentation submitted and interrogate its proposed debt settlement plan. Tuskys has provided documents indicating that it made payments to suppliers amounting to Ksh2.77 Billion in June 2020 as per the Authority’s order,” read a press release from the Competition Authority.
The authority said that the retailer has negotiated moratoriums and extension of its obligations with its lenders and is in communication with key suppliers to maintain supplies.
Today’s notice from the authority follows investigations of abuse of power in Kenya’s retail sector, which found four retailers to have delayed their payments to local suppliers for over 90 days. The investigation found that Tuskys had debt worth Ksh 1.29 billion, and therefore gave the retailer a July 16th ultimatum to clear its debt with suppliers, giving priority to FMCGs. CAK also asked Tuskys to prepare and submit a debt settlement plan, as well as records showing the extent of their debt.
A Possible Tuskys Acquisition?
Following todays’ developments, CAK is satisfied that the supermarket will repay its obligations towards its suppliers over the next four months. Further, the CAK will follow up with the bid to find a strategic investor within the next 14 days, and “consider and issue a determination upon submission of a merger/acquisition application.”
CAK will also conduct weekly checks to ensure the retailers’ compliance with its debt settlement plan. Meanwhile, the authority will continue to scrutinize its financial statements, calling suppliers to present their grievances to the agency.
“…the Authority continues to interrogate the financial statements, and management accounts availed by Tuskys, we call upon suppliers who may be aggrieved, and have not presented their matters to the CAK, to continue doing so. This will enable the Authority to establish Tuskys’ accurate debt portfolio”.
