Troubled retail chain Uchumi Supermarkets is locked in a land ownership dispute with the Kenya Defence Forces (KDF), which has laid claim to a 20-acre prime parcel of land located in Kasarani, near the Thika Superhighway.
KDF has moved its equipment on the disputed land, 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-listed Uchumi had already signed a sale agreement with a church group, which had committed to buy the land for Sh2.8 billion.
“The Roysambu KDF Camp is on Ministry of Defence land; the issue of laying claim to a military camp does not arise. The onus is on the claimant to provide evidence,” said the KDF spokesperson Colonel Paul Njuguna in a response to Business Daily queries.
Uchumi, whose previous attempts to sell the land had hit legal headwinds, says that it is engaging KDF over the ownership dispute.
A visit to the land adjacent to the Thika Road Mall shows excavation is ongoing, with tents already put up and a perimeter fence erected. Military vehicles used to transport personnel and equipment are strategically located at the entrance.
Sand bags are also placed in the compound.
Uchumi Supermarkets said it has kicked off negotiations to wrestle back its most prime asset from KDF.
“We are engaging with them to resolve the issue. We are confident that this matter will soon be resolved,” said the retail chain in a statement.
Uchumi last November inked a deal with Jewel Complex Limited to sell the land at Sh2.8 billion, which offered its suppliers and creditors some hope for payment of their dues.
However, the transaction with the church group suffered a setback after the High Court refused to strike out a case that Sidhi Investments had filed against Uchumi in 2005, claiming that the retailer reneged on a sale deal after receiving 10 per cent payment for the land.
After retired High Court Judge John Osiemo refused to strike out the case in 2007, Uchumi challenged the decision.
Uchumi insists there was no sale agreement, and that it did not receive any money from Sidhi Investments as deposit for the prime property.
Jewel Complex Limited, which was tipped to buy the land, is a firm owned by five top officials of Jesus Winners Ministry. Edward Mwai Kiongo has a 36.36 per cent stake, while Agnes Wanjiku Kiongo, Raphael Mwiti Thiaru and James Kiongo Mwai each own 18.8 per cent in the firm.
Paul Gichohi Mutune owns the other 9.09 per cent. Jewel Complex paid Sh330 million deposit in December.
Uchumi supermarket is fighting off a petition to wind up its operations, the second in three years.
During its first cash crisis in 2005, the retail chain set its sights on selling the Roysambu land to ease its financial troubles.
On March 9, 2005, Sidhi Investments offered to buy the land for Sh118 million, which Uchumi agreed to. The firm agreed to pay a 10 per cent deposit for the land and wrote a Sh11.8 million cheque in favour of Uchumi.
However, two days later Uchumi advertised the land for sale, which prompted Sidhi Investments to sue.
The firm asked the High Court to compel Uchumi to enter into a sale agreement with it and wrap up the transaction.
Uchumi, however, argued that there was no agreement to sell the land to Sidhi Investments and denied receiving any payment for the property.
The Court of Appeal agreed with retired Justice Osiemo, who ruled that if indeed Uchumi received Sh11.8 million as a 10 per cent deposit for the land then there was a valid sale contract.
The Court of Appeal’s decision could complicate the deal between the supermarket and Jewel Complex Limited and thus make matters harder for Uchumi, which is already struggling under the weight of billions owed to its suppliers.
Uchumi is expected to meet its creditors on Monday, where the retailer hopes to table its revival plans.
The cash-strapped retailer has given its suppliers, bankers and creditors two stark choices; either take 30 percent of what it owes them – and give up an estimated Sh2.5 billion – or, failing that, be prepared to lose all their money.
The proposed recovery plan filed in court reveals that the retailer is in a deep financial hole and will only survive if its creditors agree to forfeit 70 percent of their total claims estimated at about Sh3.6 billion.
Uchumi disclosed in the court documents that it is fighting a record 45 legal suits before the magistrate’s courts, the High Court and Tribunals - all arising from its inability to pay debts.
Over 30 companies have so far joined the winding up petition filed by Githunguri Dairy.
NSE investors remain in the dark as the troubled retailer is yet to publish its financials.