Troubled retail chain Uchumi’s Taj Mall branch stock and equipment will be sold on May 18 at the fall of the auctioneer’s hammer to recover Ksh50 million rent arrears accumulated over 10 months.
The action, if effected, will be the latest in a series of debt recovery efforts that have occurred in recent months with the risk of pushing the retailer closer to the brink.
Uchumi — which was placed under statutory management between 2006 and 2011 — has lately been hit by a barrage of claims from suppliers and creditors it owes close to Sh6 billion in Kenya, Uganda and Tanzania.
The loss-making supermarkets chain is currently battling a winding-up suit in Kenya and was in January forced to file for bankruptcy in Kampala where it failed to service debts after shutting down operations.
Talks of a government bailout emerged last week, bringing into sharp focus the tenure of Jonathan Ciano, the former chief executive who helped get Uchumi out of the 2006 receivership but has since his removal from office last year been accused of cooking books to paint a rosy picture of the retailer’s finances.
Taj Mall’s seizure of Uchumi’s inventory adds to the woes of Kenya’s oldest retail chain, which for the second time in a decade is being choked by unpaid suppliers’ dues and mounting debts.
Uchumi’s position has more recently been made more difficult by the fact that it has been forced to rely on asset sales and costly bank loans for working capital, as it buys time to get a strategic investor to inject Sh5 billion into the business in exchange for a majority stake.
Supermarket defaulted on rent
Taj Mall Monday appointed Moran Auctioneers as bailiffs to recover the Sh50 million in rent arrears through the sale of a cache of confiscated goods at the outlet, which was closed in March.
“We have given them (Uchumi) payment options but they claim that they do not have money. We are left with no option but to auction the property,” said Ramesh Gorasia, who is one of the Taj Mall owners.
The Taj Mall-Uchumi tiff mirrors the battle in Uganda where Golf Course Holdings, the landlord at Garden City Mall where Uchumi had a shop, has locked up the premises and denied the retailer access to the residual stock held there at the time of closure.
Mr Gorasia revealed that Uchumi had defaulted on rent payments since September last year, offering a rare peek into the financial troubles at the listed supermarkets chain.
The list of goods confiscated from Uchumi and are up for auction includes 4,200 tissue papers, 605 cans of Mortein Doom, 129 pieces of Imperial Leather soap, 1,238 packets of Aquafresh toothpaste, 55 units of Del Monte juice, and 176 cans of Tusker beer.
Others are 930 bundles of hair weave, three StarTimes aerials, 63 Keringet water bottles, 164 containers of Blue Band margarine, 36 Kasuku exercise books, 18 pieces of Java coffee, 240 packets of Kericho Gold tea, and 145 bottles of Elianto cooking oil.
It was not immediately clear if landlords at the other four outlets Uchumi closed — Embu, Eldoret, Nakuru and Kisii — have also attached the retailer’s goods to recover unpaid rent. The closure of the five shops leaves Uchumi with 20 outlets in Kenya.
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