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
Mr Jonathan Ciano, the chain’s CEO, said that Uchumi has set a board meeting this week to work on the details of the application for its return to the bourse.
Botched expansion
He did not give dates on when the application is expected to land at the CMA’s desk.
In 2000, a botched expansion plan saw the company’s fortunes begin to dwindle, leading to its inability to meet financial obligations on an ongoing basis.
This left it with an accumulated debt of more than Sh2 billion owed to suppliers and bankers, with a huge fraction of them having been paid in the past three years.
The government advanced the retail chain Sh675 million, which has grown to about Sh757 million, after its near collapse.
Though the retail chain has been on the recovery path since the entry of receiver managers in mid 2006, it had been unable to clear the government debt, Sh207 million to shareholders and Sh130 million to the bankers—KCB Bank and PTA Bank.
So far, the government agreed to convert Sh350 million of a Sh757 million debt into shares, giving the state an 11 per cent stake in Uchumi Supermarkets.
The bankers have agreed to re-negotiate the terms of the loan, which initially stood at Sh957 million.
The debts have hurt the chain’s growth plans including make it difficult to source fresh debt and reduced cash flow, leaving its main rivals— Tusky’s Supermarket and Nakumatt — to race ahead in consolidating market share.
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