Corporate News
The Uchumi Supermarkets Limited Taj Mall branch in Nairobi which was closed on March 21, 2016. PHOTO | SALATON NJAU
By DAVID HERBLING, hdavid@ke.nationmedia.com
Troubled retail chain Uchumi’s Taj Mall branch stock
and equipment will be sold on May 18 at the fall of the auctioneer’s
hammer to recover Sh50 million rent arrears accumulated over 10 months.
The action, if effected, will be the latest in a series of
debt recovery efforts that have occurred in recent months with the risk
of pushing the retailer closer to the brink.
Uchumi — which was placed under statutory
management between 2006 and 2011 — has lately been hit by a barrage of
claims from suppliers and creditors it owes close to Sh6 billion in
Kenya, Uganda and Tanzania.
The loss-making supermarkets chain is currently
battling a winding-up suit in Kenya and was in January forced to file
for bankruptcy in Kampala where it failed to service debts after
shutting down operations.
Talks of a government bailout emerged last week,
bringing into sharp focus the tenure of Jonathan Ciano, the former chief
executive who helped get Uchumi out of the 2006 receivership but has
since his removal from office last year been accused of cooking books to
paint a rosy picture of the retailer’s finances.
Taj Mall’s seizure of Uchumi’s inventory adds to
the woes of Kenya’s oldest retail chain, which for the second time in a
decade is being choked by unpaid suppliers’ dues and mounting debts.
Uchumi’s position has more recently been made more
difficult by the fact that it has been forced to rely on asset sales and
costly bank loans for working capital, as it buys time to get a
strategic investor to inject Sh5 billion into the business in exchange
for a majority stake.
Taj Mall yesterday appointed Moran Auctioneers as
bailiffs to recover the Sh50 million in rent arrears through the sale of
a cache of confiscated goods at the outlet, which was closed in March.
“We have given them (Uchumi) payment options but
they claim that they do not have money. We are left with no option but
to auction the property,” said Ramesh Gorasia, who is one of the Taj
Mall owners. Analysts at Cytonn Investments said Uchumi will continue to
struggle to operate due to cash flow problems to fund daily operations.
“Uchumi will need to raise more capital to remain
operational in a competitive retail environment,” said Cytonn in a
research note.
The Taj Mall-Uchumi tiff mirrors the battle in
Uganda where Golf Course Holdings, the landlord at Garden City Mall
where Uchumi had a shop, has locked up the premises and denied the
retailer access to the residual stock held there at the time of closure.
Mr Gorasia revealed that Uchumi had defaulted on
rent payments since September last year, offering a rare peek into the
financial troubles at the listed supermarkets chain.
The list of goods confiscated from Uchumi and are
up for auction includes 4,200 tissue papers, 605 cans of Mortein Doom,
129 pieces of Imperial Leather soap, 1,238 packets of Aquafresh
toothpaste, 55 units of Del Monte juice, and 176 cans of Tusker beer.
Others are 930 bundles of hair weave, three
StarTimes aerials, 63 Keringet water bottles, 164 containers of Blue
Band margarine, 36 Kasuku exercise books, 18 pieces of Java coffee, 240
packets of Kericho Gold tea, and 145 bottles of Elianto cooking oil.
It was not immediately clear if landlords at the
other four outlets Uchumi closed — Embu, Eldoret, Nakuru and Kisii —
have also attached the retailer’s goods to recover unpaid rent
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