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Uchumi seeks Sh500m from shareholders

NAIROBI, Kenya, Jul 2 – Uchumi Supermarkets will for the third time seek to raise an additional capital from its shareholders.

The chain’s Receiver Manager Jonathan Ciano said on Thursday that the management would meet with the shareholders on July 28 to ask for at least Sh500 million as extra capital injection.

“Already I have Sh400 million that we raised during the last attempt through the debenture holders and the suppliers,” Mr Ciano stated.

Should this bid be unsuccessful, he said, then current debenture holders will be given another chance with the last option being that of taking a strategic partner on board.

Mr Ciano was categorical that this would be the last attempt to get shareholders to participate in the revival of the supermarket chain.

The retailer has already repaid Sh1.3 billion of its debts.

“The secured bank debts stood at Sh957 as at July 2006 and have gradually been reduced to Sh467 million by the end of June 2009.This includes an accrued interest of Sh269,”Mr Ciano said.

He added that while Sh700 million had so far been cleared on pre-receivership unsecured creditors and rent, there was need to boost shareholder funds through resolutions to be passed during this meeting. 

“The eroded shareholders funds over time before receivership funds must be treated to strategically boost performance through equity,” Mr Ciano said.

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Meanwhile the retail chain is forecasting a 25 percent increase in profit for 2009 compared to the same period last year.

“If you recall we had the duties and taxes and packaging materials that was Sh120 million, we also had a crunch on the energy, the two items cost us not less than Sh80 million negative in the last financial period. Since these two have been brought into some sanity we expect from the year starting July 1, we will definitely do much better,” he explained.

Uchumi Supermarkets have been reporting losses for the last seven years in between which it went into receivership and only returned to profitability last year.

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