CHOPPIES OWED P124M BY PAYLESS

Botswana Stock Exchange-listed Choppies Group is owed P124.1 million by Payless Supermarket secured by a pledge of the shares by Fours Group.

Choppies has been running Payless since 2014 doing all the procurement, advertising as well as the entire Human Resources recruitment. Choppies as lender and Payless as a borrower entered into a loan agreement in terms of which Choppies would avail credit to Payless in respect of stock purchased from Choppies Distribution Centre. Choppies was also to avail funding from time to time to enable Payless to pay its trade creditors and service providers and purchase stock on behalf of Choppies. Presenting Choppies Enterprises financials for the year ended June 30, 2020, CEO Ramachandran Ottopathu said in June the Company was instructed by the High Court of Botswana to release the shares.

“The company has applied for a stay of execution against the court ruling. The company still retains the pledge on the shares for all the outstanding receivables from Fours Group,” he said. The Payless Supermarket receivable is fully provided for.

On matters relating to the investigation into the allegations of fraud in respect of stock losses and bulk sales, the investigation was closed during August 2020 as no evidence could be found that any person was prejudiced, nor that fraud was committed.

Ottopathu said the company was in the process of restructuring its debt. The Debt Restructuring Plan will allow Choppies to repay the lenders in smaller tranches than the previous structure. This is meant to release some cash to the company and improve the cashflows going forward.

“The Board is of the view that the buffer that has been provided by lenders coupled with improved profitability levels will go a long way in keeping the Company as a going concern for the short, medium to long term,” he said. BusinessMonitor also learnt that Payless, which is currently under liquidation has temporarily closed nine of its outlets, leaving only three in operation. The closed shops include Tlokweng, Mochudi, Old Naledi and G-West to mention a few. The decision was taken in view of the current lockdown circumstances.

Competition Authority once rejected an application for a buying group exemption from Choppies Distrubition Centre and Payless Supermarket. According to the Authority, the applicants were both trading in the Fast Moving Consumer Goods and it made them direct competitors.