Kenya Wall Street

Curtain Comes Down on Iconic Nakumatt


It is the end of the road for supermarket chain Nakumatt Holdings. This is after Nakumatt creditors unanimously voted to dissolve the outfit after all plans to resuscitate it failed.

Nakumatt Holdings,
which is now technically insolvent, was until three years ago, Kenya’s largest supermarket
chain.

Until February 2017,
Nakumatt was regarded as the largest Kenyan retailer, with 62 branches across
the region, 45 in Kenya, 9 in Uganda, 5 in Tanzania and 3 in Rwanda and a Gross
turnover of KSh 52.2 billion.

Trouble for Nakumatt first began four years ago when it began to experience severe cash flow hitches.

Analysts attribute the epicentre of the financial hurricane at Nakumatt to an aggressive expansion that soon eroded its cash, forcing the retailer to go for loans and credit from banks and suppliers.

READ;

Nakumatt sells 25% stake to Foreign fund for $75 million

Global Credit Ratings downgrades Nakumatt To BB- as debts jump to Sh18B

Winding Down

When Nakumatt could no longer meet its financial commitments, its suppliers and employees went to court. PKF Consulting Limited (PKF) was appointed as Nakumatt Holdings’ administrator in January 2018 pursuant to an application filed by unsecured creditors. This was in order to assess the possibility that the company could be revived after a full assessment of the company.

All creditors of
Nakumatt were to come forward and register their claims with the retailer.

On the list of the
biggest creditors are banks, who are owed KSh 6.9 Billion, Kenya Revenue Authority
(KRA) KSh 1.8 Billion and Trade Creditors KSh 18.6 Billion.

Having assessed
Nakumatt’s last audited accounts as at February 2016, and management accounts
as at 31 December 2017, Nakumatt’s total debt was KSh 35.8 Billion.

Trade
creditors have the biggest claim against Nakumatt Supermarket., made up largely
of suppliers of tradable goods on credit. Their claim account for 51.9per cent
of total creditor claims, amounting to KSh 18.6 Billion.

The
amount of assets securing Nakumatt’s entire debts amount to KSh 5.2 billion.
Nakumatt’s liabilities thus surpass the available assets by KSh 30.6 billion.

 In making a decision to liquidate the
business, the administrator said while it was possible to turn around Nakumatt
Holding Limited, this would take years to actualize.

PKF Consulting Limited (PKF) also says any attempted turnaround of the business would be very costly and the Company is likely to be loss-making for the better part of the turnaround window.

This
implies that such a turnaround would need to be financed by additional debt to
sustain operations before achieving break-even. The firm reported that Nakumatt
has no assets to collateralize such additional funding.

PKF
also said it would be impossible to attract an investor to inject the
substantial amount of equity required to restructure Nakumatt’s leaking balance
sheet.

The total market value of all the assets in the remaining six branches of Nakumatt is valued at KSh 110.5 Million. These branches are Highridge, Mega, Kisumu, Nakuru, Lavington and Prestige.

Related:

Naivas Outbids Tuskys, Chandarana to Acquire Nakumatt’s Assets amid its Liquidation

Nakumatt Bows Out of Prestige Mall as Naivas Takes Over

Nakumatt Kisumu Gets 7 Day Notice to Clear Workers’ Arrears



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