The Kenya Defence Forces has allowed Uchumi Supermarkets #ticker:UCHM to sell part of the disputed Kasarani land to Jewel Complex for Sh400 million as the retailer seeks to unlock working capital.
The military, which moved into Uchumi’s 20-acre piece of land in Kasarani, gave the retailer the green light to conduct a valuation on three acres of the property but has continued to place a caveat on 17 acres.
The move has allowed Uchumi to negotiate a sale of the property to Jewel Complex linked to Jesus Winners Ministry in Roysambu pending approval by the Ministry of Industrialisation, Trade and Enterprise Development.
The retailer says the sale of the Kasarani land, proceeds from the forceful takeover of Uchumi Supermarkets’ Lang’ata branch and a loan from the government will provide enough resources to pay off creditors and avoid closure.
High Court had stopped the planned sale and all pending debt recovery cases, outstanding loans, and rent claims against Uchumi, in favour of a Company Voluntary Agreement (CVA).
The CVA will meet on May 30 where the retailer and 121 suppliers are expected to review agreements on how to settle Sh4.2 billion owed to them and ensure the payments are made on time.
“Uchumi supermarkets is at liberty to conduct valuation of land known as LR. No. 23393 for which the ministry (Defence) has no claim. However, to access land known as LR No. 5875/2 whose title is vested in the ministry has been declined,” a Defence Ministry letter seen by the Business Daily reads.
Troubled retail chain Uchumi Supermarkets is locked in a land ownership dispute with the Kenya Defence Forces (KDF), which has laid claim to the prime parcel of land located in Kasarani, near the Thika Superhighway.
Uchumi Supermarkets has been fighting a long-drawn battle with the military, squatters and politicians over the Sh2.8 billion 20-acre prime parcel.
KDF moved its equipment on the disputed land and set up a camp, creating a standoff with the cash-strapped retailer.
Uchumi has been banking on selling the land to turn around its dwindling fortunes.
The Nairobi Securities Exchange #ticker:NSE -listed Uchumi had already signed a sale agreement with Jewel Complex, which had committed to buy the land for Sh2.8 billion.
KDF is said to have seized 17 acres of the property, which is located in the densely populated Nairobi estate of Roysambu, which would not be ideal for military use.
Uchumi, whose previous attempts to sell the land had hit legal headwinds, previously said it is engaging KDF over the ownership dispute.
The retailer’s CEO Mohamed Ahmed Mohamed did not respond to our text messages or pick our calls by the time of going to press.
Meanwhile, the retailer wants to focus on selling part of the parcel that is not in dispute to raise funds for settling debts and turning around the company.
In a letter to the ministry, the retailer expressed worries that delays in approving the sale may see the buyer back out and demand a refund for a Sh330 million deposit.
“Only 17 acres have now been occupied by KDF and only 3 acres are available for sale. The current purchaser has continued with the expressed interest of acquiring the 3 acres having paid a deposit of Sh330 Million in January 2018 and a new sale agreement has already been signed for the 3 acres.
"Rescinding the sale agreement would potentially expose the company to further penalty charges and Directors to future liabilities,” the letter read in part.
Uchumi is hoping to also get an additional Sh600 million from the government as well as money from forceful takeover of the Uchumi Supermarkets’ Lang’ata branch by KDF.
KDF has forcibly acquired 3.7 acres adjacent to Wilson Airport, on which Uchumi Supermarkets’ Lang’ata branch sits.
The National Land Commission (NLC), on behalf of KDF, is working on the papers that will convert the land and buildings estimated to be worth more than Sh500 million for military use.
NLC chairman Gershom Otachi said talks on the compulsory acquisition of the Uchumi property were ongoing. He declined to reveal the worth of the property and its intended use by the military.