Uchumi demands Sh3bn from KDF in asset auction dealTuesday May 31 2022
Uchumi Supermarkets expects to receive Sh3 billion from the sale of its Lang’ata branch property, which was forcefully acquired by the Kenya Defence Forces (KDF) last year.
The retailer, currently struggling to stay afloat, said a letter of award from the National Land Commission (NLC) to aid the transfer of the property will be ready by end of June.
The KDF said last year that it will forcibly acquire 3.7 acres on which Uchumi’s Lang’ata branch sits, adding a fresh twist to the ownership of the prime plot that is the subject of a court suit.
The NLC, on behalf of KDF, has been working on a paper that will convert the land and buildings into military use since last year.
“Uchumi Supermarkets Plc is waiting for the letter of award. This is expected within the next 30 days. Creditors shall be notified in case of any variation to our projections,” said the retailer during a creditors’ meeting on Monday.
Proceeds from the transactions are set to help pay the retailer’s debt. The company carries the property at Sh806.6 million and says that the sale will leave it with a gain of Sh2.1 billion.
Creditors that had secured their loans using the asset include the government, which is claiming Sh1.3 billion, UBA Bank (Sh176 million), and ICDC (Sh115.9 million).
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It remains unclear why the KDF has been pursuing the land that sits next to Wilson Airport in Nairobi which the US government warned earlier was vulnerable to terrorist attacks due to lax security.
The airport handles about 90 percent of domestic flights that mainly comprise chartered and commercial flights to holiday destinations such as the Masai Mara Game Reserve, Mombasa, Amboseli National Park, Lamu, Kilimanjaro, Diani, Lokichogio, and Nanyuki.
It is currently ranked among the busiest airports in terms of aircraft movement in East and Central Africa.
The supermarket says the High Court has so far stopped the seizure of any of its assets by creditors in favour of a company voluntary agreement (CVA) through which claims will be settled in an orderly manner.
Under the deal, the retailer and suppliers were to form a committee and agree on how to settle the Sh4.2 billion owed to them and ensure the payments are made on time.
The Kenya Revenue Authority (KRA) and UBA are among the creditors that have sought to attach the retailer’s properties to recover their money. The bank had gone to court to sell the Lang’ata Road land, which the retailer used as security for the loan.
The case was, however, dismissed. The taxman has also filed an application seeking to attach Uchumi’s assets in a bid to collect taxes amounting to Sh64.3 million.
High Court judge David Majanja put on hold the plans by the taxman, pending a report on the status of the CVA. The court directed that the matter be mentioned on June 10.
Besides the Lang’ata property, Uchumi also plans to conclude the sale of three acres in Kasarani for Sh401 million, which it received from Jesus Winners Ministry.
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The church group has demanded a refund of the money plus interest of 24 percent if the retailer fails to close the transaction by June 2.
Jesus Winners Ministry said it had taken out a loan and paid the money to the retailer but has waited four years to conclude the transaction that is now stuck at the Ministry of Trade.
Uchumi signed a sale agreement with Jewel Complex, a company belonging to the church group, which had committed to buy the 20-acre piece of land for Sh2.8 billion.
However, the KDF moved its equipment and set up camp on the prime parcel near the Thika Superhighway, claiming 17 acres of the property, creating a standoff with the cash-strapped retailer.
The church group agreed to buy the three acres not in dispute pending approval from the Trade ministry led by Cabinet Secretary Betty Maina. It is unclear why the government has not cleared Uchumi to sell the property even after the retailer obtained a no objection letter from the military to dispose of the parcel.