Cash-strapped Uchumi Supermarkets has finally come to an agreement with six of the seven suppliers that had petitioned a court to liquidate the retail chain over dues worth billions of shillings.
The suppliers have agreed to withdraw the case; a significant milestone in the troubled supermarket’s recovery plans with the management now exuding confidence that they will reach an ‘amicable agreement’ with the remaining supplier by next week.
Uchumi Supermarkets CEO Julius Kipng’etich noted that getting rid of the case is in line with their turn-around strategy.
“This petition blocked many of the financial facilities that we enjoyed. We expect to unlock some money to the tune of Sh300 million after the petition is withdrawn,” said Kipng’etich.
UBA-Kenya had agreed to advance Uchumi Sh300 million to help keep the retail chain afloat. Uchumi plans to use the money to pay suppliers when they resume trading.
Last week, suppliers agreed to convert half of their old debt into equity in a deal brokered by the government. Uchumi’s total outstanding debt is Sh6.1 billion, of which Sh3.6 billion is owed to suppliers.
Uchumi and the suppliers also agreed to open an escrow account in which all money from the sale of the new supplies would be deposited. Kipng’etich said 106 companies had agreed to continue supplying. By close of business on Wednesday, 68 of them had already supplied.
The CEO said they would appreciate over 16 suppliers who had stuck with them through the hard times including Brookside, Mini Bakeries, Kevian, Green Forest and Orchard Juice. Others include Eveready, Galana, Mill Bakers and Interconsumer.
Besides converting half of old supplier debt into equity, the retail store has also borrowed about Sh1.2 billion from Government, all of which it plans to spend on suppliers’ debts. Specifically, suppliers owed Sh200, 000 or less will be paid from this kitty.
Kipng’etich said the sale of Ngong Hyper is in progress. “The contract has been signed and the buyer has already made a downpayment of Sh400 million,” said Kipng’etich adding that they hope to complete the transaction by August.
Uchumi will also re-enter the Uganda and Tanzania, which were part of the markets that they exited as a measure to stop haemorrhage. However, the CEO insisted this could be done only after stabilizing the Kenyan market, which was their base.
“We plan to re-enter our neighbouring countries within three to five years but after stabilizing Kenya first. You know Kenya is our base,” said the CEO.