Kenya’s largest retailer files for bankruptcy protection
NAIROBI - Nakumatt Holdings, East Africa’s largest retailer, is seeking a court order to enter administration as part of a plan to revive its debt-laden business.
The Kenyan company will go to court on November 8 for a hearing on the application, which proposes that "business-turnaround professional" Peter Kahi of PKF Consulting be appointed as administrator, according to a statement e-mailed on Monday from the capital, Nairobi. Nakumatt is "optimistic" that the order will be granted, as it will enable the company to continue as a going concern, it said.
"The order will enable Nakumatt to achieve a better outcome for its creditors as a whole than would likely be the case if the company were liquidated," according to the statement.
Nakumatt has been struggling to pay suppliers and owes at least 30-billion shillings ($289m) to creditors including KCB Group, Kenya’s largest lender, along with Standard Chartered Bank Kenya and Diamond Trust Bank Kenya. The debts, which include commercial-paper loans, have forced the company to shutter branches in neighbouring Uganda and Tanzania, as well as its home market of Kenya.
CEO Atul Shah, whose family controls the Nairobi-based company, said last month he was in talks with local rival Tusker Mattresses, which trades as Tuskys, about a merger. Those talks are continuing, the company said on Monday.
"Tusker Mattresses has, subject to the Competition Authority of Kenya’s approval, undertaken to forge ahead with its investment in Nakumatt in connection with its proposed merger," according to the statement.
Tuskys was willing to guarantee as much as 3-billion shillings of debt and provide 650-million shillings in additional capital to Nakumatt, the Nairobi-based Business Daily newspaper reported on Tuesday, citing an offer letter by the smaller rival.
Nakumatt had 63 stores in four East African nations at the end of 2016. Shoprite Holdings of South Africa is already in talks about opening its first stores in Kenya by filling space left empty by the Nakumatt store closures.
Carrefour of France, run by franchise holder Majid Al Futtaim Holding, has also taken up one store in Nairobi.
Administration would protect Nakumatt against the enforcement of security over the company’s property or right of re-entry by landlords, it said.