A senior Government official has laid bare the extent of Nakumatt Supermarket’s financial woes, revealing the retailer is reeling under a Sh30 billion debt.
This makes the recovery of the regional retail chain, whose debt position in the public domain has been put at Sh18 billion, more tasking.
According to the source, whose line of work falls within trade-related matters, Nakumatt’s management disclosed its true financial position to the Government when it sought its intervention in regaining stability.
“The retailer was just opening branch after branch by piling debt. It chose to grow at other people’s expense,” said the official who asked for anonymity. According to the source, Nakumatt owes suppliers Sh15 billion. Ten commercial banks are also on its neck, seeking to recover Sh8 billion and it has also soaked in an additional debt to the tune of Sh7 billion in commercial paper.
The revelation comes at a time when speculation is rife that Nakumatt has cooked its books to cover up its true financial position. In May 2015, James Maina Karanja, an internal auditor, was gunned down when he unearthed a web of fraud in top management.
The lenders owed money by the retailer are Standard Chartered Bank, Kenya Commercial Bank, Stanbic Bank, NIC Bank, Barclays Bank and Diamond Trust Bank.
Others are Bank of Africa, Oriental Bank, Habib Bank and Guarantee Trust Bank.
Huge suppliers like Unilever that stock fast-moving consumer goods like Omo, Lifebuoy, Rexona, Blue Band and Knorr beef cubes have suspended supplies to the retailer in the face of piling debt. East African Breweries has also reportedly walked away from Nakumatt. To add insult to injury, African Cotton Industries Ltd, the manufacturer of popular tissue paper and sanitary towel brands such as Tena, Flora and Medicott, has lodged an insolvency petition against Nakumatt over a Sh70 million debt. Nakumatt also owes Regent Agencies Sh3 million in rent arrears for Nakumatt City Hall and recently had a tiff with one of its Ugandan branch tenants at Katwe over rent arrears. Knight Frank Uganda, the property manager of the Acacia Mall, Village Mall and Victoria Mall where the retailer also had branches recently announced the closure of the outlets over what is believed to be non-payment of rent.
Thika Road Mall (TRM) has also seized the supermarket’s goods, seeking to recover Sh51 million in rent arrears. The official said the retailer’s financial woes could trigger a domino effect in the financial sector.
“Some lenders can even go down if we do not move carefully. Some SMEs that had lent to suppliers will also suffer,” said the source. The Sh7 billion short-term debts that Nakumatt borrowed via commercial papers also pose a threat to the survival of some fund managers.
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