- Kenyan retailer has given creditors 15 days to make claims ahead of its bankruptcy filings at the Uganda High Court.
- Uchumi owes suppliers, landlords and employees USh8.8 billion or Sh265 million.
- The listed retailer decided to exit Uganda and Tanzania after the management failed to turn around the subsidiaries despite efforts that included selling assets and injecting cash to boost working capital.
Uchumi Supermarkets has asked suppliers of its ill-fated Uganda to make claims within the next two weeks as it winds up operations in the market.
Kenya’s oldest major retailer told suppliers to lodge claims in the next two weeks ahead of bankruptcy filings at the Kampala High Court.
“To all creditors…. You are hereby required to file a reply to the petition within (15) fifteen days from the date of service of the petition on you in the matter prescribed under law.
“Should you fail to file a reply to the petition on or before the date, the petitioner may proceed with the hearing of the petition,” said Uchumi in an advert.
Uchumi owes suppliers, landlords and employees USh8.8 billion or Sh265 million.
The listed retailer decided to exit Uganda and Tanzania after the management failed to turn around the subsidiaries despite efforts that included selling assets and injecting cash to boost working capital.
“That management of your petitioner as considered all alternative options and undertaken all efforts to dispose of the assets of the company to realise working capital; however, these efforts have not been fruitful. That your petitioner then took the decision to formally close the business,” said the advert.
The advert says the decision to invite all creditors to make claims is meant to facilitate an orderly sale of assets and distribution of the proceeds. Some suppliers and creditors had moved to court to seek compensation.
Nateete Shopping Centre in Kampala which housed an Uchumi branch went to court and attached assets to recover rent arrears of $112,636 (Sh11.49 million).
Ugachick Poultry Breeders also attached assets at Uchumi’s Garden City Shopping Mall branch.
ALSO READ: Ex-workers sue Uchumi for Uganda exit
Employees have taken the troubled retailer to court seeking their salaries.
Analysts say Uchumi’s exit from Tanzania and Uganda is a good move since it will result in cash savings.
“What that means is Kenya was the only entity making money. Exiting basically saves Uchumi the costs associated with supporting the subsidiaries, including employee costs,” said Moses Waireri, a senior researcher at Equity Investment Bank.
As part of its revival plan, the retailer is seeking a strategic partner who will come with Sh5 billion. The firm announced it would create an additional 900 million shares to accommodate the new partner who will in turn get a controlling stake in the company.
The retailer also decided it will sell its landholdings and re-invest the proceeds back into operations.
This is the third time the firm is planning a turnaround in less than two decades. An ambitious expansion strategy in the early 2000s resulted in the retailer’s closure on June 1, 2006. Uchumi had to convince suppliers to convert part of their receivables into equity in addition to shareholders pumping in funds.
The firm’s former chief executive Jonathan Ciano, who led the transformation, would later lead the retailer back into the red and was subsequently sacked in 2015.