Uchumi seeks Sh270m to boost its recovery plan

Listed retailer, Uchumi Supermarkets, which reopened four months ago, plans to ask its shareholders for Sh270 million early next year to bring the oldest retail chain to full recovery.

Having sunk to insolvency on June 1, Uchumi said on Thursday it had completed the first phase of revival and is now looking for resources to expand its business. 

Funding

Uchumi boss Jonathan Ciano yesterday said revenue from 10 reopened branches had risen by 82 per cent. 

He said the company had paid Sh200 million owed to suppliers and preparing to pay the same amount in the second instalment. 

"It is our aspiration that we shall now endeavour to raise further funding and nurture the cordial relationship that will address competitive positioning and meeting part of the suppliers’ business expectations," Mr Ciano told reporters at Uchumi’s Ngong Hyper store, Nairobi.

Viability

To raise the Sh270 million, the retailer intends to issue debentures to shareholders. 

Debenture holders would be secured creditors and cannot lose their money even if the company were to close again.

However, an attempt last June by the Government and receivers to convince shareholders to buy debentures by investing Sh300 million failed to raise the amount. 

Mr Ciano said the debenture approach did not work then because shareholders had fears about the firm's viability and that the timing was wrong because there were other issues at the Nairobi Stock Exchange (NSE).

"We are going to re-approach the shareholders now because then you know we were telling them to believe Uchumi would be revived but now they can see the company is on its feet," he said. The managers further noted that non-shareholders might be given a chance to buy the debentures after the owners.

Uchumi initially opened five branches in July and two more – Nairobi West and Buruburu – in August.

It reopened three more at the beginning of October, bringing the total to 10 out of 17 branches open before it was placed under receivership.

The retail chain will tomorrow open Jogoo Road and Kionange Street branches in Nairobi. 

Mr Ciano said reopening of the remaining stores would follow soon although two– at Parklands and Kimathi Street in Nairobi– and those in Nakuru, would be permanently closed.

He said the ultimate objective of the company is to be readmitted to the NSE, and has began the process by seeking to be rated. A number of workers were laid off when the retail chain was declared insolvent were rehired.