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Losing bidders ask CA to probe KFC sale further

Losing bidders ask CA to probe KFC sale further
January 22
08:10 2018
  • Once a leading bidder, Sefalana wonders why citizen companies were not given preference in the first place


Some of the losing bidders in the sale of the embattled KFC Botswana franchise have appealed with the Competition Authority to consider their unhappiness with what they see as lack of transparency in the process of selecting possible buyers for the franchise.

The Competition Authority held a public hearing last Friday to examine the proposed sale of KFC Botswana to a joint venture between oil company, VIVO Energy and Baobab Khulisani of South Africa which is already running 11 KFC outlets in that country.

Group Managing Director of Sefalana Holdings, Chandra Chauhan, who revealed that his company was one of the top four companies that had been selected to make indicative offers, believes they were hard done by the opaque manner of the processes leading to the sale. Chauhan said though the final offer amount was not a matter of public knowledge, through fellow industry players, he had got wind of it. According to him, the Sefalana Group could have beaten the offer had it been given the chance.

Chauhan said he had received information to the effect that some of the bidders were given an opportunity to raise their bids while Sefalana was never offered such an opportunity. He also lamented the opening of two new stores while the liquidation process was ongoing, saying Sefalana had prepared a bid for 12 KFC outlets. Had it been for all 14, the bid could have been significantly higher, he added.

Chauhan also questioned whether citizen companies should not have been given preference in the sale of the franchise.

However, the liquidator Nigel Dixon-Warren said the vetting of the buyers was done by the franchisor, KFC Africa, which is owned by Yum! Brands, an American fast food company. The vetting process was an elaborate one which started with over 60 interested parties and was reduced to four bidders who made indicative offers before a preferred bidder was ultimately selected.

Explaining further, Dixon-Warren said indeed after the preferred bidder was selected by the franchisor, he as liquidator had solicited a higher purchase amount in order to benefit the creditors as they had helped with working capital to keep the stores open.

He also said his collaboration with the creditors had resulted in a decision to sell the business as a going concern so as to benefit the creditors with continuous business rather than to close down and try salvage whatever could be raised from proceeds of sale. He said there were no funds to even rehabilitate some of the outlets which were in a debilitated state.

The liquidator said two stores, including one in Phakalane, which had been opened after the liquidation process started were not handed over to him and fell outside his ambit of work.

Wayne du Toit, who represented one of the creditors, Coldline Holdings, which supplies chicken to the franchise, told Global Post that keeping the franchise open as a going concern had been the best decision. However, he backed Sefalana’s plea for the Competition Authority to look further into the details of the sale transaction. Other creditors include commercial banks and other suppliers.

Other losing bidders, namely a company called AJF Investments and one Leo Chiweshe, backed assertions made by the Sefalana chief. Said Chiweshe: “The deal was done over our heads. It leaves a bitter taste in the mouth.”

KFC Botswana, which is saddled with debts of over a P100 million, first announced its intention to close down in June 2016 when former owner, Anthony Siwawa, firstly lost the franchise agreement and then subsequently creditors came breathing down his neck and he could not find a buyer on his own.

However, 400 employees across the country got a respite when the liquidator took over and kept the outlets open. The liquidation process, which could have been a four-month affair, turned into a year-and-a half-marathon because the former owner contested the liquidation in the courts, taking it all the way to the Appeals Court before withdrawing his case.

The Competition Authority will give a ruling on whether the sale will go through after considering all merits and demerits of the transaction.

The proposed buyer, represented by Grant Weekly, says the first thing they are looking at is more training of staff with a view to growing their foot print. According to him, growing the local supply from the current 90% was in their plans. He expressed confidence in the quality of the current supply, saying growing the franchise’s footprint could make it possible for items on the menu which are found only in Botswana stores, such as chakalaka, to be introduced to as many as 22 000 KFC stores worldwide.






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