Uchumi Supermarket
Nairobi.
Kenya’s troubled Uchumi Supermarkets, which is yet to pay a total of
Sh5.1 billion to its suppliers in Tanzania, has taken a Ksh250 million
(about Tsh5.375 billion) short-term loan from United Bank for Africa
(UBA) Kenya to pay suppliers.
The
Nairobi bourse-listed retailer — which is battling a winding-up suit—
said it owes suppliers a total of Ksh3.6 billion (about Tsh77.4 billion)
and has turned to bank loans for financing, awaiting earnings from
disposal of assets and cash injection from a strategic investor.
This
is the second time in three months Uchumi is borrowing to settle
suppliers’ dues, having borrowed Ksh500 million (about Tsh10.75 billion)
from KCB Bank in December last year.
“We
acknowledge that we cannot rely on bank loans for too long and for this
reason we are exploring other sources of funds such as disposal of some
assets, engaging a potential investors,” said Julius Kipng’etich,
Uchumi chief executive.
“We
however continue settling current supplies from our operating cash as
well as the savings generated from the closure of some of our branches,”
said Mr Kipng’etich in an interview with the Business Daily.
Uchumi
has historically been grappling with suppliers’ dues and mounting
debts, which led to the listed retailer being declared insolvent on May
30, 2006 and subsequent suspension from trading at the Nairobi bourse
where it was readmitted on May 31, 2011.
Uchumi
Supermarket announced in October last year (2015) that it was winding
up its operations in Tanzania and Uganda to rescue it from imminent
financial collapse and stabilize its Kenyan operations.
But
since then, suppliers and former employees in Tanzania have not been
paid. A group, formed after the Kenyan retailer started closing its
shops in Tanzania, has established that Uchumi Supermarket had 221
suppliers who owe the company Sh5.1 billion.
“We
have never been officially informed about the company’s closure but
when we heard about it and read the same in newspapers, we decided to
start making follow-ups which culminated into the establishment of this
group…so far, we have not been paid and we do not know when the payments
will be effected,” said the chairperson of the group, Mr Joseph Mlay.
In
the new debt, the Kenyan retailer has hired Pamoja Capital to help
guide the search for a deep-pocketed investor to put in up to Ksh5
billion (about Tsh107.5 billion) in exchange for a controlling stake in
Uchumi. It also plans to dispose of two prime properties: the Ngong Road
branch and the Lang’ata Hyper store.
Uchumi
last week closed five loss-making outlets, including Nairobi’s Taj
Mall, Embu, Eldoret, Nakuru and Kisii, leaving the retailer with 20
outlets in Kenya.
BACKGROUND: TANZANIAN RETAILERS COUNT LOSSES
“We
have never been officially informed about the company’s closure but
when we heard about it and read the same in newspapers, we decided to
start making follow-ups which culminated into the establishment of this
group…so far, we have not been paid and we do not know when the payments
will be effected,” the chairperson of a group of suppliers for Uchumi
in Tanzania, Mr Joseph Mlay told The Citizen recently.
Source:TheCitizen
