Uchumi suppliers agree to forfeit Ksh.2.5B owed to them
Suppliers of troubled Uchumi supermarkets have agreed to forfeit Ksh.2.5 billion debt owed to them as part of a proposed recovery plan for the retailer.
The slash on debt represents 70 percent of the total Ksh.3.6 billion owed to the suppliers for goods supplied.
The suppliers will be paid 30 percent of the accruing debt, 40 percent of the debt will be converted to equity through preferential shares while 30 percent will be discounted debt.
“This is a positive development for the company. It will however be an ongoing stakeholder engagement at both the company and shareholder level,” said Mohammed Mohammed CEO Uchumi Supermarkets.
In March this year, Uchumi gave the creditors two options; either take 30 percent of what the retailer owes them or be prepared to lose all their money.
The adoption of the debt redemption strategy under Uchumi’s self initiated Company Voluntary Agreement (CVA) gives breathing room to the under fire retailer having faced a barrage of winding up petitions in 2018.
Uchumi will now work to put in place an immediate arrangement for the clearance of the outstanding 30 percent debt owed to suppliers pegged at an approximate Ksh.1.1 billion.
“Liquidation is not the best option. Suppliers can now expect some down payment on existing debt. We will now work together to see a resumption of business,” said Kimani Rugendo, Chairman, Uchumi Suppliers.
The new debt redemption will is now be pegged on the liquidation of Uchumi assets including the sale of two parcels of land in Roysambu and Lang’ata Road.
The decision by the suppliers grants Uchumi a continued supply of goods even as the existing board seeks a complete turnaround for the cash strapped firm.
“Today was a vote of hope for the future. A vote for this brand is a vote for Kenyan manufacturers,” added Uchumi Supermarkets Chairman John Karani.
Uchumi moved to court earlier this year to table the CVA to extinguish the runaway wind up petitions against the firm.
According to Uchumi, the total liquidation of the company would have resulted in a total loss for both the creditors and shareholders as the sale of existing assets would not top existing debt obligations.