Uchumi sets Sh9 price for rights issue

Uchumi has priced its rights issue at Sh9, offering a discount of 10 per cent on the market price. Some 99,534,980 shares will be on sale with full subscription set to net the retailer a gross of Sh895.8 million.

The cash call price is discounted on its trading price of Sh10.15 at the time of announcement.

Three new shares are up for grabs for every eight held at the close of register on October 22.

The Capital Markets Authority granted approval on October 3 and the Nairobi Securities Exchange on October 9. Trading in the rights commences on November 10 and ends on November 28, with the results announced on December 17. The new shares will list on December 29.

“The board is pleased to confirm that it has received a written commitment from the government that it will take up its full entitlement of the rights issue, representing 13.8 per cent of the transaction,” said Uchumi.

Tight cash flows forced the retailer to borrow Sh405 million from Co-operative Bank a few weeks ago in an “asset financing loan” that was partly intended to pay amounts outstanding to suppliers.

Uchumi CEO Jonathan Ciano said the retailer plans to open more branches across East Africa and adequately finance working capital for subsidiaries.

Uchumi has come under heavy pressure from fast-expanding Nakumatt, Tuskys and Naivas.