Uchumi gets back head office in deal with landlord

Troubled retail chain Uchumi has regained control of its Nairobi headquarters after it inked a debt settlement deal with the landlord and got the Directorate of Criminal Investigations (DCI) officers out of the premises.

Uchumi’s #ticker:UCHM landlord, the Kenya National Trading Corporation (KNTC), recorded the consent in court, paving the way for the management of the troubled supermarket to access the building.

“The Kenya National Trading Corporation shall reopen and grant access to Uchumi Supermarkets to the premises as from October 26, 2018 at 8:30 am,” the agreement says, offering the retail chain relief after nearly a month of lockdown.

The DCI, in a letter dated October 24 to Uchumi's lawyers and filed in court, said that its officers had conducted a search and exited the premises.

The team is expected to produce a multi-agency report on the operation. Under the agreement, Uchumi has agreed to surrender all godowns at the head office that it has sublet to third parties.

Rent accrued

Uchumi will further clear all rents that accrue as from December as stipulated in the agreement, failure to which KNTC will be at liberty to distress for rent or terminate the lease.

The pending rent arrears of Sh38 million have, however, been excluded from the consent.

KNTC had on October 2 locked Uchumi out of the premises due to non-payment of rent but the dispute took new turn after it emerged that the DCI officers had taken over the building.

Correspondence between the DCI and Uchumi’s lawyer further shows that the former entered the building to ascertain if the retail chain is in possession of contraband goods. The search warrant was granted by court on October 15 to allow the Special Crime Investigations Unit to access the Uchumi Supermarkets headquarters.

“Upon being satisfied with our search we exited the said godowns as we found it and did not lock Uchumi Supermarkets Limited or any other occupant out of the said godowns,” said the DCI in the letter.

This new development is a reprieve for Uchumi which claims that the decision to deny its managers access to the premises is against the October 2 court order that had suspended all judgments, decrees, attachment of properties, or distress for rent against it.

Winding up petition

Uchumi had claimed that locking up its headquarters is also hampering its participation in a winding-up petition filed by Githunguri Dairy Farmers Co-operative Society and frustrating recovery efforts. Githunguri Dairy is seeking to wind up Uchumi over a Sh44.8 million debt.

The quest to wind up Uchumi has gathered pace with total claims approaching Sh900 million.

Court records show that a total of 20 companies have joined the suit, taking the total claim against Uchumi to Sh865 million.

Uchumi has been struggling under the weight of debts and a cash crunch that has affected its ability to pay staff salaries on time. The retail workers’ union has previously said that non-payment of salaries, which began last December, had affected 1,355 employees.

The retail chain, which owes suppliers over Sh3.6 billion, has been banking on the sale of land in Kasarani to turn around its fortunes but the money — estimated at Sh2.8 billion — has been slow in coming because of challenging approval processes.