Uchumi owners in drive for trading rights at bourse

Uchumi Supermarkets’ 12,0000 owners have agreed to convert the chain’s debts into equity in a bid to win back firm’s trading rights at the Nairobi Stock Exchange.

Uchumi’s shares were suspended from trading on the stock exchange in 2006 after it closed its stores following an aggressive but failed expansion plan that led to a Sh1.2 billion loss and left the firm reeling in a Sh2 billion debt owed to suppliers, Kenya Commercial Bank and PTA bank.

At the time of delisting from the bourse, Uchumi shares were trading at Sh14.50. It was the only supermarket chain listed at the NSE.

On Monday, Uchumi told the Capital Markets Authority (CMA) that shareholders had instructed directors to convert the debts, including accrued interest on debts of the retail chain’s creditors such as the Government and suppliers, into shares.

Even though the government does not exercise director shareholding in Uchumi, it can exercise its ownership weight through its parastatals — the

Restructure loans

New company secretary Pauline Wamuyu said in a letter to CMA last week that Uchumi’s directors were also authorised to restructure the loans owed to KCB and PTA to be repayable in one year under new terms. “… at the company’s 25th annual general meeting held on 29th January 2010 the shareholders passed that the directors are hereby authorised to restructure the loans owed to the banks, KCB and PTA, to be repayable in one year on such terms and conditions as may be agreed upon,” said Ms Wamuyu.

The turn-around of the retailer has been on course after the supermarket chain yielded a pre tax profit of Sh169 million in 2009 after recording increased revenue of Sh8.2 billion.

With the return to the bourse, Uchumi will be Kenya’s first company to be successfully resuscitated out of receivership.

The government rescued the supermarket chain with a Sh675 million loan which was to be repaid once the company tapped a strategic equity partner.

The supermarket chain was lifted out of receivership in March after banks agreed to renegotiate terms of loans to the retailer.