Auctioneers have temporarily suspended sale of Tuskys Supermarket stocks at Nairobi’s Greenspan Mall over Sh24 million rent arrears, offering a sigh of relief to the struggling retailer.
Sannex Auctioneers said Tuskys has entered into a deal with Greenspan Mall proprietor to put on hold plans to auction its goods over rent arrears and a consent has been filed in court to compel the retailer to clear the debt in two weeks.
The auctioneers had given the retailer a seven-day notice starting September 14 to pay the outstanding rent arrears or have its goods sold through public auction on September 22.
Tuskys goods that were set for auction include electronics, assorted clothes and handbags, freezers, trolleys, phones among other items.
The former giant retailer is currently in deep cash flow troubles and is seeking to raise funds, including debt and sale of stake to equity investor, to clear loans and supplier dues.
“The auction has been put off to allow Tuskys time to pay. Today, they went to file consent so that they can be given two weeks to comply,” said a representative from Sannex Auctioneers in an interview yesterday.
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“The total amount that was due in rent arrears by the retailer at Greenspan Mall was Sh41 million. As at yesterday, they had paid Sh17 million.”
The planned auction of Tuskys goods at Greenspan Mall comes at a time the Mall’s Real Estate Investment Trust (Reit) manager, ICEA Lion Asset Management (Ilam), said it explored all available options before resorting to evicting the retailer from its premises.
Nairobi’s Greenspan Mall says the action was also taken to cushion the investor, noting that Tuskys began showing signs of distress as a tenant earlier in the year.
The landlord said as the Reit manager, it had been in discussions with the retail chain to reach an amicable payment plan to warrant their continued operations at the mall but the retailer kept on defaulting on payments. The mall had granted Tusker Mattresses Limited a lease over unit G1 on the Ground Floor 12 years starting July 2011.
“The payment plan has been dishonoured by the tenant. In this regard, in order to cushion the investors, the manager has instituted a process to recover the arrears as per the debt management policy and legal provisions,” said Ilam in a separate statement.
The struggling retailer is set to raise Sh2 billion short-term debt from an unnamed private equity firm based in Mauritius, with the funds aimed at stabilising operations to make it more attractive to strategic investors it is courting.
Raising debt capital will ease the retailer’s financial pressure, giving it more time to negotiate the sale of a majority stake in a transaction that could delay by six months or more.
