Uchumi secures rescue package worth billions

Uchumi Supermarket has finally clinched a strategic investor in a deal that is expected to bring the struggling retailer back on its feet.

Speaking to Capital FM Business, Uchumi Chief Executive Julius Kipngetich revealed that the deal is awaiting regulatory approval before it is officially announced. “We will announce in a few days once all the necessary approvals are finished,” Kipngetich said.

The strategic investor is set to inject Sh3.5 billion into the retailer which will partly plug the Sh5 billion debt hole the supermarket owes suppliers and financiers. The government is expected to release Sh1.2 billion to the retailer as part of a bailout loan.

“We have so far received Sh500 million from the government and with the injection from the investor, we are now ready to restock our stores in the next 90 days. Our franchise model of business will also begin in those 90 days,” Kipngetich told Capital FM Business.

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“We are lucky we have assets which we are planning to liquidate according to our needs. Everything has been planned and we will announce in due course,” Kipngetich hopes.

The retailer had in December 2015 announced it was looking for a strategic investor to take a controlling stake in the firm in exchange for Sh5 billion capital injection.

The cash will be raised through either equity, convertible debt or a combination of both.

“The directors are hereby authorised to identify and negotiate with any suitable investor to raise any sum up to a maximum of Kenya Shillings five billion by way of debt capital through the issue of convertible debt instruments or by way of equity capital by way of private transfer of shares in Uchumi to the investor or a combination of both options,” read a section of public notice for the Annual General Meeting that took place January 2016.

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“The investment shall be on terms determined to be suitable by the directors of Uchumi and tabled for ratification by the shareholders at the next annual general meeting (subject to any required regulatory approvals),” the notice read.

Uchumi’s share has gained 8.70 percent to close at Sh2.50. (Copyright: Capital FM)

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