Nakumatt to petition creditor for reprieve

Creditors of struggling retailer Nakumatt are facing the daunting task of keeping their money in the retailer after it emerged that it did not have money to pay them all if liquidated today.

A report prepared by Nakumatt administrator Peter Kahi from PKF Consulting, Nakumatt only has Sh3.9 billion of the Sh35.8 billion it owes suppliers and banks.

This has seen Mr Kahi draft a proposal that creditors waive at least 25 percent of their debt in Nakumatt and support recovery efforts to get back their money.

The proposal shows that banks are owed Sh6.9 billion while Kenya Revenue Authority is seeking at least Sh2 billion in unpaid taxes.

Trade creditors are owed the highest at Sh18.5 billion while staff related liabilities stand at Sh1.4 billion.

To give Nakumatt financial headroom, Mr Kahi is proposing that private placement investors and trade creditors waive 25 percent of their loans and covert 75 percent of the remaining debt into equity in Nakumatt.

“Given this situation, it is imperative to restructure the balance sheet to allow the Company any chances of survival and enable it to pay its debt. Our proposals therefore consider scenarios relating to debt waiver or conversion to equity,” Mr Kahi said.

Nakumatt is also facing the daunting task of keeping its branches open as landlords move to evict them from their premises to boost footfall back to their malls.

The administrator has proposed to the banks that there be a freeze in interest payments until 2021, with the loan balance cleared over a six year period.

“We propose an initial moratorium period on repayments to the banks, the banks will be paid commencing 28 February 2021 and on each anniversary thereafter, with the last payment made within six years ending on 28 February 2026,” he says in the proposal that will be presented to creditors on Wednesday.

The headroom will create an avenue for Nakumatt to continue generating revenue and open up an avenue for the creditors to sell their shares.

The proposal has also seen the administrator seek to have creditors form the board of directors and pick a new management team to run Nakumatt.

The administrator proposes to have Nakumatt listed by 2024.

“Prior to the IPO (initial public offer) we propose that the administrator engages with Investment Bankers to create a platform for trade of shares among the creditor groups on a private placement basis. The shares held by unsecured creditors will be listed on the NSE by introduction thus making them more liquid and marketable,” Mr Kahi said.