Nakumatt Kenya Creditors Face Haircut on Debt, Government Says

NAIROBI (Capital Markets in Africa) – Creditors owed more than 30 billion shillings ($289 million) by Nakumatt Holdings Ltd. will take a haircut if a plan by East Africa’s biggest retailer to enter administration goes ahead, said Kenya’s Industry & Trade Secretary Adan Mohamed.

Nakumatt directors will next week seek the High Court’s approval to appoint an administrator and protection from insolvency in order to buy time from creditors including tax agencies, banks, landlords and suppliers. Approval by the court is expected to result in a credit plan being presented within 60 days of the company entering administration, Mohamed said in an interview Wednesday in the capital, Nairobi.

The administrator will “look at the 30 billion shillings, who owes who, all the dynamics and statistics and say in order for the company to survive, we all need to take a haircut,” Mohamed said. “Everybody must take a haircut. Everybody! No choice.”

Nakumatt has been struggling to pay suppliers and owes money to creditors including KCB Group, Kenya’s largest lender, along with Standard Chartered Bank Kenya Ltd. and Diamond Trust Bank Kenya Ltd. The debts, which include commercial-paper loans, have forced the company to shutter branches in neighboring Uganda and Tanzania, as well as its home market of Kenya.

Chief Executive Officer Atul Shah, whose family controls the Nairobi-based company, said last month he was in talks with local rival Tusker Mattresses Ltd., which trades as Tuskys, about a merger. Those talks are continuing, the company said Monday.

Ninety companies seeking Nakumatt’s liquidation have rejected the company’s proposed rescue plan, saying it’s neither detailed nor satisfactory, the Nairobi-based Business Daily newspaper reported on Wednesday, citing court documents. The High Court has granted the creditors four days to file responses to Nakumatt’s court petition, it said.

Nakumatt spokesman Alfred Ng’ang’a declined to comment.

Source: Bloomberg Business News

 

Leave a Comment