Uchumi borrows Sh250m to pay suppliers as it grapples with debts
Shoppers at an Uchumi branch in Nairobi. PHOTO | FILE
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Uchumi has turned to bank loans for financing, awaiting earnings from disposal of assets and cash injection from a strategic investor.
Troubled Uchumi Supermarkets has taken a Sh250 million short-term loan from United Bank for Africa (UBA) Kenya to pay suppliers.
The Nairobi bourse-listed retailer — which is battling a winding-up suit— said it owes suppliers a total of Sh3.6 billion and has turned to bank loans for financing, awaiting earnings from disposal of assets and cash injection from a strategic investor.
This is the second time in three months Uchumi is borrowing to settle suppliers’ dues, having borrowed Sh500 million from KCB Bank in December last year.
“We acknowledge that we cannot rely on bank loans for too long and for this reason we are exploring other sources of funds such as disposal of some assets, engaging a potential investors,” said Julius Kipng’etich, Uchumi chief executive.
“We however continue settling current supplies from our operating cash as well as the savings generated from the closure of some of our branches,” said Mr Kipng’etich in an interview with the Business Daily.
Uchumi has historically been grappling with suppliers’ dues and mounting debts, which led to the listed retailer being declared insolvent on May 30, 2006 and subsequent suspension from trading at the Nairobi bourse where it was readmitted on May 31, 2011.
The retailer has hired Pamoja Capital to help guide the search for a deep-pocketed investor to put in up to Sh5 billion in exchange for a controlling stake in Uchumi. It also plans to dispose of two prime properties: the Ngong Road branch and the Lang’ata Hyper store.
Uchumi last week closed five loss-making outlets, including Nairobi’s Taj Mall, Embu, Eldoret, Nakuru and Kisii, leaving the retailer with 20 outlets in Kenya.
San Giorgio Ltd, a Mombasa-based firm, last week moved to court seeking to sell off the assets of Uchumi to recover unpaid dues amounting to Sh53 million.
A supplier has moved to court seeking to wind up Uchumi Supermarkets over an undisclosed outstanding debt, adding to the woes of Kenya’s oldest retail chain. The case will be heard on April 5.
Uchumi in January filed for bankruptcy in Uganda after failing to service debts in the market where it pulled out, alongside Tanzania.
However, the Industrial Court has stopped Uchumi from sacking the 253 employees declared redundant after closing five branches.
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