Uchumi debenture priced at Sh10

September 11, 2009
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, NAIROBI, Kenya, Sep 11 – Retail chain Uchumi Supermarkets will from next week open its debenture issue through which it hopes to raise Sh1.2 billion.

The chain’s Receiver Manager Jonathan Ciano said on Friday that each debenture unit would go for a discounted price of Sh10 and it is only open to bona fide Uchumi shareholders who were on their register as at May 31, 2006.

“The forms will start to be sent on Monday and shareholders will have time until November 15th,” he said referring to the validity of the offer.

Each shareholder has been allocated a minimum of 3,000 units but to ensure the issue’s success, shareholders are encouraged to apply for additional debentures loan stock over and above the allotted amounts.

The chain in July received the shareholders’ approval to go ahead with the issue which is being carried out after its valuation exercise which revealed that Uchumi is worth Sh3.4 billion.

Proceeds from this exercise will enable the supermarket to be lifted from receivership while enhancing its capital to position it competitively in the market.

“Our individual participation in the debenture loan scheme will go a long way to reduce dilution of existing shareholders’ wealth while providing commensurate market return to the shareholders,” he explained.

The funds will also be used to address the negative shareholder funds which currently stands at Sh125 million.

Mr Ciano said they were also preparing an Information Memorandum which they would forward to the Capital Markets Authority (CMA) for consideration of the re-listing of the chain.

“We will go with our package and say we here we are, we have been out of the (Nairobi) Stock Exchange for three years, this is the corporate valuation and this is our performance,” the Manager said.

The Receiver Manager has been credited with turning around the chain from its loss-making streak into a profitable company since they embarked on the chain’s Rescue Plan in 2006.

For the year ended June 2009, the chain recorded a net sales revenue of Sh8.2 billion against Sh6.8 billion posted in the previous year. Customer numbers also went up from 12 million to 16 million during the same period.

When the Deferred Tax Asset of Sh250.7 million is factored in, the chain’s post tax profit for the year adds up to Sh420.6 million against Sh95 million recorded in the 2007/2008 fiscal year.

However increase in electricity costs and packaging material costs following the 120 percent increase in tax for plastic bags affected their profitability, Mr Ciano added.

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