Nakumatt yet to finalize deal with strategic investor as cash crunch bites
Inability to secure a strategic investor continues to compound Nakumatt Holding’s financial troubles.
So dire is the situation that the regional retailer has delayed workers dues even as it tries to woo back manufactures to restock its outlets.
The regional retailer was originally eyeing January to have secured a strategic investor by selling a 25 percent stake in the company for an estimated Sh7.7 billion.
However several delays have further compounded to its woes given its inability to quickly generate cash to stay afloat.
The cash flow constraint has seen Nakumatt get into trouble with its suppliers leading to stock outs with the firm only recently renegotiating new deals to have its shelves stocked.
Speaking to Citizen Digital, Nakumatt chief marketing officer Andrew Dixon alluded to the delays in securing capital adding he expects a deal to be complete sometime in July.
“We are looking at weeks not months but you can’t always guarantee that when they come to fruition they will be as good as you hoped them to be,” Mr Dixon said.
At the peak of its success, Nakumatt was grossing an estimated Sh70 billion in revenues helped in part by its rapid expansion with 54 stores across East Africa.
This saw Nakumatt take on debt, which Mr Dixon is coy in sharing given the sensitivity of ongoing negotiations.
“I cannot answer that its privileged information to people we are engaging, but it’s a considerable amount of money,” he said.
In February 2015 Nakumatt’s debt was estimated at Sh15 billion which has seen some analysts question Nakumatt’s move to hinge its recovery on a strategic investor.
“I mean right now telling us that some private equity investor is going to give them $75 million this has got to be Santa Clause. Who else can do that and put in $75 million while it owes roughly $150 million and you have business that’s not making an income. I don’t know anybody who’s thinking that way,” Rich Management chief executive officer Aly Khan Satchu said.
With salary delays now a reality, Mr Dixon ruled out massive layoffs but added that it could come into play should the business not turnaround as fast as expected.
“You can never say never. You can’t say what’s going to happen in future but that’s not in our immediate plan,” he stressed.
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