According to reports, the Kenyan shareholders of multinational grocery and general merchandise retailer; Choppies, will bailout the the Kenyan branch to settle part of its supplier debt currently estimated at 600 million Kenyan Shillings. This is in line with its plan to restock its stores and inject life into the firm in an effort to revive the business.
According to the retailer (Choppies) it’s local shareholder Export Trading Group (ETG) which has a 25 percent stake, has come up with a recapitalisation plan which will enable it restock its shelves as suppliers get their cash in three parts.
According to Daily Nation, whether or not Export Trading Group (ETG)’s cash injection is an intention to rack up its stake or a move towards an eventual buyout, is not clear.
Choppies deal with the Association of Kenya Suppliers (AKS) will see the retailer release 50 percent of the cash owed to creditors who sign the agreement on the condition that supply is resumed.
The other 50 percent will be paid in two installments and settled within three months after every six weeks.
Choppies Director Parin Patel said in the agreement that, “For Choppies making the initial payment of 50 percent, suppliers need to sign this payment plan and delivery plan. The supplies shall resume based on our LPOs with the existing payment terms in place as soon as the first payment of the 50 percent is done.”
A couple of the suppliers who spoke to Business Daily Africa, have expressed optimism regarding the deal.
The suppliers also indicated that they are willing to engage with the retailer on the proposed terms, which may just save the supermarket chain.
Chairman of Association of Kenya Suppliers (AKS) Kimani Rugendo said, “We have goodwill they are genuine because they are the ones who came up with the proposals and this is a better way to deal with this rather than going to court.”
The Botswana based multinational retailer Choppies, has in recent times suffered huge stock shortages which have almost pushed it over the brink, with the most recent casualties being the Bungoma and Kiambu branches that were recently shut down.
Choppies which started out as a single store in 1986, has since grown to Kenya (where it has 12 stores after acquiring Ukwala Supermarket), Mozambique, Namibia, South Africa, Tanzania, Zambia, Zimbabwe, and Zambia.
In May 2019, the Chief Executive Officer (CEO) of Choppies Ramachandran Ottapathu, was fired after a tumultuous year which saw the company get suspended from trading on the Botswana and Johannesburg stock exchanges where it was listed.
The company had initially planned to set up two new outlets in Kenya this year (2019), before unfortunately running into financial difficulties at a time when its parent company was also hit by difficulties on the home front; Botswana.
