Money Markets
Uchumi investors face longer wait for bourse trade
Though Uchumi meets the bulk of the listing requirements including being solvent, it has not posted profits in at least three of the past five years — which forms part of the listing requirements. Photo/FILE
Posted Monday, March 15 2010 at 00:00
Investors whose money is locked up in Uchumi Supermarkets will have to wait much longer to trade their shares at the Nairobi Stock Exchange after the Capital Markets Authority maintained the retail chain’s application would be treated as a fresh listing.
The company’s shares were suspended from trading on the bourse following its closure of stores in mid-2006 due to a botched expansion plan that left it with a Sh1.2 billion loss and debts of more than Sh2 billion owed to suppliers and KCB and PTA Bank.
It was anticipated that Uchumi’s shareholders would resume trading at the market soon after the bankers agreed to renegotiate terms of its loans and lift the retail chain from receivership.
But CMA says that Uchumi has to meet the minimum listing requirements before resuming trading.
“The requirements for listing at the NSE are very clear and Uchumi will have to be subjected to them,” said Stella Kilonzo, the chief executive officer of CMA.
The chain has announced profits in two of the last five years but is on course to post a profit in the year ending June 2010 given its half year profits of Sh110 million in the six months to December.
As a result, the retail chain will have to wait until August at the earliest for CMA to start work on its application, unless it gets an exemption from the Finance minister.
This means that shareholders in the retail chain will have to wait until the last quarter of the year or first quarter of next year to resume trading at the NSE.
Because of inability to trade shares at the Nairobi bourse, Uchumi’s 12,000 shareholders missed out on massive returns that fellow investors reaped from the market at the peak of the stock market rally in 2007 that ended with the January 2008 post-election violence.
On the flipside, the suspension has also preserved the share from the price erosion that faced many counters after the violence.
The past accumulated losses have also prevented Uchumi from paying dividends despite its improved performance.
As a result, shareholders have been eyeing its return to the market in the hope of making capital gains on their investments.
Its share price stood at Sh14.50 a piece before its suspension from trading on the NSE in mid 2006.
A recent valuation by audit firm KPMG placed a share of the firm at Sh12.
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