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Feud over PTC liabilities

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More than three months after Tafika Holdings signed a sale purchase agreement with Press Corporation plc to buy off 100 percent stake in Peoples Trading Centre (PTC) at K6 billion, not all of the retail chain store’s liabilities are settled.

According to a sale purchase agreement which we have seen, under conditions precedent clause 4.1.5, 60 days after signature date, the purchaser was expected to submit to the seller a written confirmation that all assumed liabilities have been settled or agreements entered into with suppliers or judgement creditors confirming settlement.

In line with the clause, Tafika Holdings was expected to pay the liabilities within two months from February this year.

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The chain store has, however, been in the news for the bad reasons including when, recently, Electricity Supply Corporation of Malawi cut off power supply in some shops due outstanding bills.

Tafika Holdings Executive Chairperson, who is also serving as Executive Chairman for PTC, Arson Malola, however, said in an interview that there was no clause that has been flouted and the company has since written PCL in line with the clause.

“That submission has been made to PCL because it just talks about agreeing the settlement plan and payment of the judgement creditors and the judgement creditors have been paid because, if we had not complied, PCL would have terminated the agreement,” he said.

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But according to a leaked letter from some PTC senior managers, the financial position of the firm continues to deteriorate as credit continues increasing at the rate of around K300 million per month.

The letter further alleges that Tafika Holdings has failed to prove to external auditors of PTC, Deloitte, that it has the financial capacity to honour K6 billion payment and that the company failed to pay Escom arrears amounting to K495 million.

“Tafika Holdings has failed to pay Rab Processors Limited K309 million that it committed to pay within 60 days of assuming the business and Rab Processors Limited has filed in the High Court of Malawi to declare PTC insolvent and push for a forced liquidation of the company,” the letter alleges.

The senior managers who were asking PCL to reverse the deal further said Tafika Holdings has failed to pay pension arrears amounting to K309 million, which is part of the K6 billion sale purchase consideration.

PCL acting Chief Executive Officer Lyson Chithambo could neither confirm nor deny the development.

Chithambo insisted that Times speaks to Tafika Holdings and ask them if they have paid the liabilities or not because, according to him, on their part they have done all that was required

The Sale Purchase Agreement further stipulates that if the contract is breached, the deal should be terminated.

This year PCL announced to have reached an agreement with Tafika Holdings for the sale of PTC at K6 billion, which will be used to pay liabilities in lieu to paying PCL.

The deal, however, has faced resistance from employees of PTC who believe the deal will not help PTC.

Currently most PTC shops are closing down, a development Tafika Holdings has attributed to a strategy of growth which they have.

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