Managers of Peoples Trading Center have written Press Corporation Limited to terminate sale of the company to Tafika Holdings Limited due to failure to honor purchase agreement by Tafika.
In a letter signed by PTC managers addressed to PCL dated 16th May 2022 which MIJ Online has seen, the share purchase agreement was designed to clean up the balance sheet of PTC and clear its outstanding loans and sort out creditors by 28th February 2022.
The total liabilities for PTC was at K18.5 Billion Kwacha as of 28 February 2022, including over K10.9 Billion-kwacha loans with banks and various financial institutions.
According to a letter from PTC management, Tafika Holdings Limited committed to pay the assumed liabilities amounting to 6 Billion Kwacha within 60 days or enter into settlement agreement with the suppliers within 60 days of signing the agreement.
However, PTC managers said as of May 22, Tafika Holdings Limited has failed to honor the commitment to pay the assumed liabilities within 60 days of signing the Share Purchase agreement.
PTC Managers have since expressed worry with the current financial position of the company as it continues to worsen, with creditors expecting to grow by K1 Billion kwacha in the three months ending May 31st.
Among others, the letter indicates that Tafika Holdings Limited has failed to External Auditors of PTC and Deloitte that it has the financial capacity of financial resources to honor the K6 Billion Kwacha purchase consideration.
Due to accumulated creditors in the absence of liquidity injection by Tafika Holding limited, the equity injection needed has moved from K6 Billion Kwacha assumed by Tafika to 7.5 Billion Kwacha in 3 months.
“We would like to advise PCL that management of PTC has been receiving personal threats from creditors and we cannot continue to take the risks to our lives by trading when we know that the company is not capable of paying for the services in the absence of a capital injection.” Reads part of the letter
The managers have since written Press Corporation to terminate or cancel the Share purchase agreement with Tafika Holdings Limited citing that the company does not have the capacity to raise the 6 Billion kwacha needed to clear liabilities which keeps accumulating, as proven by Auditors of PTC and Deloitte.
Alternatively, PTC managers have requested Press Corporation to wind up the company following the normal legal route for voluntary liquidation if it does not want to proceed with an investment in retail.