Uchumi commences fresh audit of supplier bills
Beleaguered retailer Uchumi Supermarkets has commenced a fresh audit of supplier bills as the chain moves to ring fence its court approved Company Voluntary Agreement (CVA).
Uchumi requires all trade and services creditors to register their debt, accrued before March 2 this year, through an online portal.
“The CVA which was approved by the High Court directs that we verify all old debts through a transparent and sustainable process and we are asking all suppliers to register their debts within the next three weeks,” said Uchumi Supermarkets CEO Mohamed Mohamed.
According to the CVA which got the courts nod on July 1 this year, Uchumi owed an estimated Ksh.4 billion to its suppliers.
The trade-related creditors have all along stood with the retailer having voted twice to save Uchumi from liquidation including the most recent and telling vote in March this year.
The suppliers approved the CVA agreeing to a 30 per cent hair cut for good supplied or an equivalent Ksh.1.2 billion.
Additionally, the suppliers agreed to discount payments equivalent to 40 per cent of the arrears into non-cumulative convertible preferential shares.
The balance representing 30 per cent of balances is meanwhile set to be reimbursed across the next five years.
Uchumi is banking on a revamp of strategy including franchising to as it hopes to break back into profitability in June 2024.
In the short run, the supermarket is betting on the disposal of part of its assets to offset parts of its debt which is cumulatively estimated north of Ksh.7.7 billion to include outstanding bank loans and credit accruing to other institutions including Kenya Power.
The suppliers have opted to keep the faith given they would rank behind every other creditor on payments preference should they chose to wind up the supermarket.
For instance, only 6.8 per cent of the balance sheet would be available to suppliers in the event of Uchumi’s liquidation.