Corporate News
International Trade principal secretary Chris Kiptoo. He met Uchumi’s
management and a section of the retail chain’s creditors on May 10,
2016. PHOTO | DIANA NGILA
By OTIATO GUGUYU, dotiato@nationmedia.co.ke
In Summary
Uchumi Supermarkets
has called for crunch meetings with creditors and suppliers in an
attempt to forestall court cases that are petitioning for its closure.
The retail chain says it wants to avoid a lengthy court
process, initiated by seven of its suppliers seeking to declare them
insolvent over a part of their debt, that has thrown a spanner into
their plans for revival.
In a meeting held Tuesday at the office of
International Trade principal secretary Chris Kiptoo, Uchumi’s
management and a section of the retail chain’s creditors resolved to
meet seven suppliers who have filed for winding up the business in a bid
to reach a consensus to withdraw the petition.
“I know we will succeed, I have talked to the seven
suppliers to make them understand the path they have taken will not be
good for anyone,” Uchumi boss Julius Kingetich said. Uchumi owes
suppliers Sh3.6 billion, with another Sh2.5 billion debt owed to banks
against a total asset base of Sh6.1 billion — which puts it in a
negative net assets position.
The litigants, imports and supply firm Ceccagnoli
Italiano Ltd, Kenblest Group, Githunguri Dairy, Kappa Oil, Insync, Star
Times and Nairobi Bottlers are owed just over Sh300 million by Uchumi.
The retailer has convinced some suppliers to convert part of the debt to equity.
The troubled supermarket met some suppliers last week who agreed to oppose the winding up petition.
Association of Kenya Suppliers chairman Kimani Rugendo told the Business Daily that two of the companies that have filed the suit had agreed to pull out in principle, without revealing their identity.
The suit is a do or die for one of Kenya’s oldest
retailers which is currently under a cash crisis after some of the
lenders who were willing to finance its revival grew cold feet.
Lang’ata Supermarket is partly charged to United
Bank for Africa (UBA) under a Sh250 million short-term facility to pay
suppliers. The bank said it was willing to offer more support if the
winding up suit is dealt with.
The Kenya Commercial Bank
(KCB), which holds the charge to Ngong Hyper Supermarket that Uchumi
has already sold at Sh1.4 billion, is unwilling to allow proceeds of its
sale to reach the retailer.
“We need to talk to KCB, money from Ngong Hyper has
began to flow and no other bank is willing to give us money because of
the petition,” said Mr Kingetich. KCB, which is owed Sh900 million, is
holding onto Sh400 million from the Ngong’ Hyper sale.
The Industrial and Commercial Development
Corporation (ICDC), which is an Uchumi shareholder, has indicated that
it will not exercise the option of recovering its debt without first
offering help as part-owner.
Uchumi also wants support from the government in
terms of a bridging loan structured like the Sh678 million offered when
the retailer was placed under receivership a decade ago
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