Just few months after the Competition Authority (CA) sanctioned a transaction involving the transfer of KFC restaurants in Botswana from owners, VPB Propco to a company called Callus (Pty) Ltd, it emerged on Thursday that the outlets are now closing shop. CA gave the transaction a green light in December albeit with conditions and a smooth change of guard was expected. However, many were left shocked this week when news emerged that the restaurants are now closing faced with the reality of ‘no more Streetwise’ meals which make up KFC menus. The statement released by VPB was lacking in detail, with no clear explanation given of whether the closure means imminent takeover by Callus has failed. VPB founder and Managing Director, Anthony Siwawa, could not be reached to explain the closure as he was said to be attending a series of meetings on Friday. “KFC Botswana can confirm that our restaurants are in provisional liquidation. We are working closely with the provisional liquidator to keep the business open so we can continue to bring our customers the great taste of KFC they know and love. The current disruption in operations may however unfortunately lead to the temporary closure of some of our restaurants,” said Doug Smart, Managing Director, KFC Africa in a statement.
Impeccable sources have revealed that a due diligence instituted by Callus dealt the deal a blow when it was discovered that the seller was over indebted. It is said some of the banks that gave VPB loans were left exposed as they were not exposed. Sources say the debts go into tens of millions of Pula. Among the banks behind the liquidation is said to be FNBB as it wants to recover some of its money. Callus is a company incorporated under the laws of Botswana and a subsidiary of Country Bird Holdings (Pty) Ltd which itself is incorporated under the laws of the Republic of South Africa. VPB Propco has been the franchisees of the KFC business in Botswana for the five years until they made their intention to exit the business known late last year, resulting in a public hearing by the Competition Authority before the deal was given a thumbs up by the authority earlier this year for Callus to go ahead with the acquisition of KFC operations. There are 12 KFC outlets in Botswana employing around 400 people.
The takeover by Callus was approved on conditions that: it will continue to source from the same suppliers that were engaged by VPB and are YUM Restaurants International (Pty) Ltd accredited as well as consider sourcing from any other YUM accredited suppliers based in Botswana; Callus will ensure that there will be no job losses as a result of the proposed transaction; Callus should demonstrate to the Authority efforts made towards facilitating that local suppliers penetrate or meet YUM Restaurants International (Pty) Ltd’s standards of accreditation; and lastly the acquiring company was expected to annually (for a period of three years) submit to the CA, a detailed report indicating a list of its new and old Botswana based suppliers. “It is with sadness that we as VPB Propco – franchisees of the KFC business in Botswana – announce that KFC Botswana will cease operating during the course of the next week, with all stores closed by 5 June 2016. Such a step is always, for us, a final resort, and during the course of the last 12 months, we worked tirelessly to seek an alternative. After much deliberation, however, it is clear that it is no longer feasible to continue operations,” Siwawa said in a statement.