EAST AFRICA – Botswana-based retailer Choppies Enterprises Ltd is facing a US$12.4 million debt owed to banks and suppliers in Kenya and Tanzania, as the retailer prepares to exit from the region after closing down its operations in March 2020.
Botswana Stock Exchange listed retailer which is also cross-listed on the Johannesburg Stock Exchange has discontinued operations in four countries — Kenya, Tanzania, Mozambique, and South Africa.
The multinational grocery and general merchandise retailer headquartered in Gaborone, disclosed in its 2020 annual report that in the 2019/2020 financial year, the board decided to discontinue the operations.
The South African business was sold off at a loss of US$8.2 million in April 2020, and a combined loss of US$58,952 on disposal of plant and equipment of discontinued operations.
The retailer’s operations in Mozambique were closed in September 2019, followed by the operations in Kenya and Tanzania in March 2020.
“Choppies invested US$9.17 million to acquire a controlling stake of 75% in the then struggling Ukwala supermarket in 2016, with the remaining 25% equity being held by a Tanzanian firm Export Trading Group”
According to the report seen by The East African, Choppies Enterprises Kenya Ltd and Choppies Distribution Kenya Ltd closed with potential liability of US$11.82 million of which 25 percent will be borne by local shareholders, and the remaining formalities will be completed in 2021.
Its Kenyan operations have an outstanding debt of US$2.75 million with Absa Bank with the repayment of the three-year loan, which was supposed to start on August 2020, secured by a corporate guarantee provided by Choppies Enterprises Ltd and moveable assets valued at US$1.29 million as of June 30, 2020.
Choppies founding shareholders have provided personal sureties towards the future obligations from its Kenyan subsidiary amounting to US$6.47 million, with recourse thereafter to the Group.
In Kenya, Choppies invested US$9.17 million to acquire a controlling stake of 75 percent in the then struggling Ukwala supermarket in 2016, with the remaining 25 percent equity being held by a Tanzanian firm Export Trading Group.
In Tanzania, Choppies faces a potential net liability of US$577,700 after the board decided to sell the businesses of the group in the country, although there is still equipment from Aura and Mlimani stores that needs to be disposed of.
The net book value of non-current assets remaining for the Aura store is US$300,000, since the value of the asset of the store had been written off due to pending liquidation.
According to the report, the Mlimani City management, where the retailer had one store, took custody of the store’s assets.
Choppies Tanzania filed a claim against Mlimani City management for US$600,000, which is currently in court.
However,there are no bank debts for Choppies in Tanzania.
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