Tuskys shareholders have agreed to sell a majority stake of the company and now await the acquisition of an investment suitor.
The nod, disclosed in a statement to newsrooms on Tuesday, paves the way for a change of guard in the leadership of the struggling retailer.
“The Orakam shareholders provided their nod to the acquisition of a majority stake in Tuskys by any equity investor who will further provide strategic leadership for the long-term growth of the business and for the benefit of all stakeholders. The Tusker Mattresses Limited board of directors together with a team of transaction advisors are currently evaluating the various offers with the aim of concluding the recapitalization of the business in the shortest time possible,” the retailer said.
The approval follows a meeting held on the July 9 that brought together the owners of Tusker Mattresses Limited represented by the children of founder Joram Kamau who own the Orakam Holdings Limited.
The retailer has further disclosed that it has secured suppliers commitment to avail goods for the period preceding the supermarket’s recapitalization through the sale of a majority stake in its effort to end stock outs caused by unpaid supplier bills.
“Under this arrangement, suppliers have signed in on a short-term portal that will ring-fence their supplies and ensure timely payment for the same. This option provides a much-needed lifeline for the business and secures a win-win stability option,” the retailer added.
Sibling rivalry
The unanimous approval of the the majority stake sale is a turnaround from past heated internal wrangles affecting the family-owned retailer.
In 2017, the children of founder Joram Kamau among them Yusuf Mugweru, Mary Njoki, Sammy Gatei, Stephen Mukuha, John Kago and George Gashwe faced off for the control of their father’s company to rock the stability of the retailer.
The all out war would culminate in the ceding of daily operations away from family ties which resulted in the appointment of seven independent general managers.
Faced by hard stakes among them a potential wind up of the retailer owing to supplier bills running into billions of shillings, the shareholders have now agreed to a sale of the majority stake to salvage the company from doom.
Earlier this year, Tuskys came under the scrutiny of Competition Authority of Kenya (CAK) for alleged buyer power abuses in the withholding of supplier bills.
The retailer which further closed three branches in a cut costing exercise in April confirmed the payment of Ksh.2.7 trillion in supplier debt last week as part of its settlement of arrears.
Tuskys is now banking on the capture of a strategic investor and cost rationalization exercises including staff layoffs to withstand adversity.
The plan to capture an investor will however take longer than its reported date of July 31.
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