… But the planned comeback is in doubt due to issues raised
Staff Reporters
The plan is to reopen the collapsed Enrich Supermarket in the first week of February 2025, according to a report prepared by a task team and shared with shareholders this week.
“The task team has held two meetings with the Enrich Holdings Board to address concerns regarding the Special Purpose Vehicle (SPV). A request to meet with representatives of the Lesotho National Development Corporation (LNDC) was made but was unsuccessful,” the report stated.
“The plan is to open the store in the first week of February,” it added.
In December last year, LNDC announced that it would play a vital role in salvaging the Basotho-owned supermarket, attributing its downfall to a shortage of skilled personnel in management.
Molise Ramaili, Interim Chief Executive Officer (CEO) of LNDC, outlined the terms of the corporation’s M15 million loan to Enrich, emphasising LNDC’s intent to be represented on the company’s Board of Directors.
“We aim to ensure that our loan investment is managed effectively, benefiting not just Enrich but other businesses as well,” Ramaili affirmed during a press conference in Maseru last December.
“Our participation on the Board will enable us to monitor the funds allocated, scrutinise operational costs, and ensure regular operational reports to facilitate business growth,” he added.
Highlighting LNDC’s active role in the supermarket’s resurgence, Ramaili stressed their interest in influencing the appointment of Enrich’s CEO or Managing Director.
“We prioritise individuals with substantial retail experience, both local and international. LNDC’s involvement will extend to managing these skilled individuals to ensure timely reporting and effective decision-making,” Ramaili stressed.
Part of the loan, he stated, would be allocated to pay Enrich’s creditors, with LNDC intervening to prevent the imminent auctioning of gym equipment by the courts.
Envisioning a strategic exit plan, Ramaili projected Enrich would regain stability within seven years, aiming to settle the loan to LNDC within that period.
“Our goal is to stabilise Enrich and eventually withdraw from direct involvement, fostering its self-sufficiency and growth,” he outlined.
However, the report by the task team has identified several issues, including a lack of proper documentation, incomplete staff recruitment processes, and unclear delegation of powers, among others.
“There is no proper documentation showing the change from the original contract to the current SPV arrangement. The second contract does not formally recognize the SPV,” the report read.
“Recruitment processes for staff remain incomplete or unclear. There is ambiguity regarding the delegation of powers between Enrich Holdings and the SPV,” it added.
The report further lamented the unclear SPV structure and operations. It revealed that the board is composed of three representatives from LNDC and two from Enrich Holdings.
“The SPV will handle operations, but clarity is required on oversight. Enrich Holdings will receive dividends annually. It is unclear whether LNDC’s dividends will be treated as loan repayments,” the report stated.
It cautioned that it was not clear which business plan would guide the operations of the SPV and recommended that the stipulation that profits be used to repay LNDC within seven years required further clarification.
“There has been a breakdown in communication between the board and shareholders, leading to confusion and concerns. There is no clear explanation regarding whether LNDC’s share of profits is a loan repayment or another financial arrangement,” the report added.
In light of these concerns, the task team recommended continuing with the first contract until clarity on the SPV arrangement is achieved.
“Clause 6.3, which may present operational or financial risks, should be repealed or reviewed to align with shareholders’ interests. The SPV structure can help shield Enrich Holdings from potential litigation risks, provided clear agreements and operations are established,” the team stated in their report.
It added: “The task team should be formally recognized as advisors to the board. While their advice should not be binding, they can play a key role in offering guidance and ensuring shareholder concerns are addressed. This recognition does not require financial compensation but ensures that the task team remains involved in critical company decisions.”
The task team also reminded all shareholders of the special conference scheduled for tomorrow, December 21, 2024, at Cathedral Hall.
“This event is critical as it will provide a platform to further discuss the SPV, address pressing concerns, and ensure all shareholders are well-informed about the company’s future. Your attendance is highly important to ensure transparency, collective decision-making, and alignment on key issues moving forward,” it said.
It concluded the report by acknowledging the efforts made so far but highlighted significant gaps in documentation, clarity of roles, and financial arrangements concerning the SPV.
“Immediate action is required to address these issues before the store opening in February to ensure transparency, protect shareholders’ interests, and create a sustainable operational structure. The task team will continue to engage with the board and update shareholders on any progress,” the report concluded.
