UPDATE 1-Kenya's Nakumatt Supermarkets to merge with local rival Tuskys

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NAIROBI, Sept 18 (Reuters) - Kenya’s Nakumatt Supermarkets will merge with local retailer Tuskys to help alleviate a severe cash flow problem that has left it with empty shelves and led to the closure of some outlets, Nakumatt’s managing director said on Monday.

Privately-owned Nakumatt had accumulated debts of $150 million by the start of this year.

“It is a merger,” Atul Shah told Reuters. Asked if the deal would help Nakumatt resolve its cash flow problems, he said: “It is a start.”

More details on the deal will be released later in the day, he said. Tuskys was not available for immediate comment.

An attempt to sell a 25 percent stake to a foreign fund for $75 million, reported by Reuters in January, failed, leaving Nakumatt with empty shelves as suppliers balked at providing stock.

The growing economies of East Africa have drawn in foreign retailers including Botswana’s Choppies, South Africa’s Game Stores and French retailer Carrefour through its Dubai-based franchisee Majid al-Futtaim.

Nakumatt, which started with a single store in Nairobi in 1992, operated 68 outlets in Kenya and neighbouring states Rwanda, Uganda and Tanzania at the start of the year but it has since closed some due to the financial troubles.

Reporting by Duncan Miriri; editing by Susan Thomas